Don’t Be the Trouble Maker-How to Make Money on the Internet and Stay Legal

More and more entrepreneurs are beginning to take advantage of all the internet has to offer. For most companies the internet is a huge player in whether or not a company will be successful, but for some companies the internet is the only player. In other words, many entrepreneurs are starting a small business that is online-only. If you run a blog or a website designed to help consumers, chances are most of your business can be done through this online website. Before you know it, advertisers are interested and vendors want to be a part of the action. Eventually, you could have yourself a very profitable online business.

However, some online companies get blindsided by the dollar signs and forget about the legal steps they must take in order to keep that money. After all, an online company takes a long time to turn profitable. When it finally happens, it’s exciting; however it is important to put that excitement on hold and consider some of the ways to stay legal with your newfound business.

3 Tips to Staying Legal with an Online Business

There are really two major things an online business owner needs to consider: Income and self-employment taxes. I hate to be the bearer of bad news, but this is sure to eliminate a few of those dollar signs you were once so excited about. Nonetheless, it is important to stay legal so as not to get in serious trouble with the government. Consider these two kinds of taxes and why they are sometimes missed:

• Income Taxes — It may seem obvious, but sometimes people forget that they have to pay income taxes if they’re making money online. It is easier to claim the money you make when you work for an employer because your paycheck generally already has income taxes taken out, but this is not true when you earn a salary on your own. Therefore, you must keep track of everything you earn and set aside money each month for income taxes.
• Self-Employment Tax- This is an extra tax you owe on top of the income tax. If you’re considered an independent contractor (which you are if you make money online independently) you must do a little math to decide what you own on this tax. In general, it equals to about $14 for every $100 you earn.

One way that independent contractors save money is by claiming expenses on all of their online income. In other words, anything used for your business is tax-deductible — computers, office supplies, gas to and from your office, etc. If you keep all of your receipts for these types of items, you will be able to write them off come tax time; thus reducing the amount of taxes you need to pay.

Although it may seem like you need to take out small business loans when all is said and done, it is really not too different than if you were working for an employer. You have the extra tax, but you are able to write off any expenses for your business.

Amanda DiSilvestro is the Editor-in-chief for Plan, Write, GO. She has been writing about all things digital marketing, both as a ghostwriter, guest writer, and blog manager, for over 10 years. Check out her blogging services to learn more!