Separate Your Finances
You should find a way to separate your business expenses and income from your personal expenses. This can be accomplished in a couple of different ways:
Email Filters and Labels
Whenever I make a purchase for my online business I apply a label to it. I like to group my business receipts according to the tax year. That way when it's tax season all I have to do is click on that label and I have all of my receipts instead of having to dig through tens of thousands of emails.
If it's a recurring subscription I will set a filter up so a label gets applied automatically to the receipt. Awhile back I made a tutorial on how to setup filters in gmail. It focuses on filter out WA notifications, but the same concept can be applied to any email that you want to filter. You can find it here:
https://my.wealthyaffiliate.com/training/using-gmail-filters-to-organize-wa-email-notifications
You should find a way to separate your business expenses and income from your personal expenses. This can be accomplished in a couple of different ways:
- a separate personal checking account
- a DBA(doing business as) checking account
- a credit card that you only put business expenses on
- using a paypal account.
Email Filters and Labels
Whenever I make a purchase for my online business I apply a label to it. I like to group my business receipts according to the tax year. That way when it's tax season all I have to do is click on that label and I have all of my receipts instead of having to dig through tens of thousands of emails.
If it's a recurring subscription I will set a filter up so a label gets applied automatically to the receipt. Awhile back I made a tutorial on how to setup filters in gmail. It focuses on filter out WA notifications, but the same concept can be applied to any email that you want to filter. You can find it here:
https://my.wealthyaffiliate.com/training/using-gmail-filters-to-organize-wa-email-notifications
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k1nl1
Premium
That is indeed a really good and helpful article. I have a question thou. Do you have an idea how it goes if you are constantly traveling? I am not in that position yet, but my idea is to focus on internet marketing and other similar ventures and be able to travel while doing so possibly for more then 3-4 years. This means constant moving from one month to the next and I can imagine that would complicate things.
I see you have experience with cross country income tax situations as you were a Colorado resident officially, but had to register as well in Hawaii while conducting online business there. Do you think that I have to register in every country as a sole proprietor to be able to operate or is there another possibility?
I see you have experience with cross country income tax situations as you were a Colorado resident officially, but had to register as well in Hawaii while conducting online business there. Do you think that I have to register in every country as a sole proprietor to be able to operate or is there another possibility?
ThomasPaul
Premium Plus
For my situation I was living in Hawaii for the entire time I was there. Due to my military status and Hawaii state laws it let me keep my Colorado residency until I decided to officially change my residence to Hawaii.
I think it all depends on how long you are in each area. If you are bouncing around from place to place without staying too long you probably don't have to worry about it. If you stay in one place for an extended period of time you probably want to consult an accountant.
Then there's another aspect of "how is the state going to track you down and prove you were in their state and made income while in that state?"
In most cases it may totally be a non-issue if it's an online business. You could always briefly researxh on the state tax office website things of that nature.
I think it all depends on how long you are in each area. If you are bouncing around from place to place without staying too long you probably don't have to worry about it. If you stay in one place for an extended period of time you probably want to consult an accountant.
Then there's another aspect of "how is the state going to track you down and prove you were in their state and made income while in that state?"
In most cases it may totally be a non-issue if it's an online business. You could always briefly researxh on the state tax office website things of that nature.
ThomasPaul
Premium Plus
nathaniell
Premium
Do you know if we could be required to pay the 'sales tax' portion considering we're not actually SELLING the product? I mean, as affiliates, we are intermediaries making a commission off of a transaction where we are neither buyer nor seller.
Great tutorial, and it's got me thinking about tax season coming up.
My method is that I only use my Paypal account to pay for things related to my business (99% of the time). I have my Paypal connected to Outright, which is not connected to any other financial accounts. That way, Outright tells me how much I'm making, how much I'm spending, and all transactions are listed. It was a life saver last year when I had to look over where I spend money and on what.
Great tutorial, and it's got me thinking about tax season coming up.
My method is that I only use my Paypal account to pay for things related to my business (99% of the time). I have my Paypal connected to Outright, which is not connected to any other financial accounts. That way, Outright tells me how much I'm making, how much I'm spending, and all transactions are listed. It was a life saver last year when I had to look over where I spend money and on what.
ThomasPaul
Premium Plus
Hmmm, I'm never heard of outright I'll have to look into it.
As far as paying the sales tax portion, I really do not know the answer. I see your point because we're just essentially "advertising" the product which further complicates things.
The best advice I can probably give is to consult an accountant in the state you live, preferably one who know's about internet marketing.
The whole sales tax thing is just a big can of worms.
As far as paying the sales tax portion, I really do not know the answer. I see your point because we're just essentially "advertising" the product which further complicates things.
The best advice I can probably give is to consult an accountant in the state you live, preferably one who know's about internet marketing.
The whole sales tax thing is just a big can of worms.
nathaniell
Premium
Yeah, I figured I'll have to ask a professional for most questions, because when it comes down to it, if my taxes are wrong, I can't really say THOMASPAUL TOLD ME! haha.
Outright is pretty basic, but good for business. If you're looking for organizing all finances in a major way, Mint is the way to go. It's also free, but is more for all-in-one type budgeting.
Outright is pretty basic, but good for business. If you're looking for organizing all finances in a major way, Mint is the way to go. It's also free, but is more for all-in-one type budgeting.
