subject: What You Ought To Recognize About Online Business Taxes [print this page] People may think that there are immense differences between conventional businesses and online companies, but the truth is that both are still monitored and taxed by the IRS. The available deductions for an online business are similar to any business that is based at home. When you are just starting to figure out the taxes, bookkeeping, and all the other reports you have to do, it may seem stressful. However, it does get better over time. If you want to learn all about the taxes for online organizations, listed below are tips and tax information for business owners.
Keep tabs on your suppliers and your independent contractors
If you hire someone from oDesk, Guru, or Craigslist, it is vital that you keep tabs on how much the independent contractor has earned if he lives in the United States. The IRS requires a 1099 form submission for everyone whom you have paid over $600 to within single year. For those who offer commissions to their affiliates, you will have to remember the total income of each affiliate selling your product. You will be pleased to know that there is free software available to track this online.
Do not delay until tax season to coordinate your records.
Because most online businesses do not have enough employees, they often fail to do their bookkeeping and records until the very last minute. Regrettably, it is when you are trying to rush during tax season that you make the most errors. People who do their bookkeeping on a regular basis will find tax season very straightforward. For every income and expense that you declare, make sure that you have proof and supporting documents. It is also imperative that you have US-based independent contractors sign their W-9, too. Keep in mind that the IRS does not demand physical signatures, which means that they can send their digital signature to you through email.
Know the maximum available deductions that you can claim for your online business.
Make sure you are knowledgeable of the tax information for business owners so you can fully maximize your deductions. In fact, if you have kids, you may even employ them to take advantage of the tax break. Giving money to charity also qualifies as a tax break that you can use to increase your take-home income. Using your home as an office as well could prove to be good for your business. However, this is on a case-to-case basis, and you need to discuss this with your accountant. In fact, some people believe that this may make you more susceptible to an IRS audit. Training costs, books, and website costs are also tax-deductible. However, the tax deductible has to be reasonable or you may find yourself scrutinized by the IRS.
