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  1. #1
    SitePoint Addict MrBaseball34's Avatar
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    Taxes (USA) for web-based businesses

    I live in the US. I am writing this to inquire how most people
    that have web-based businesses handle their income taxes.

    How do you keep track of the income? Do you get 1099's from
    Google and others that you get income from?

    Do you have income that you don't report? Is there an amount
    where you don't have to report if you make less? I can't
    imagine Google sending out a 1099 for someone that made
    $0.50...

    I'm wanting to begin a web-based business but the wife is
    unsure about these kinds of things and says, "Hey, I'm not
    going to prison with you so you better find out how it's done."
    MrBaseball34
    Hook'Em Horns!

  2. #2
    SitePoint Enthusiast Yogler's Avatar
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    So far as I know, Google won't send you a check for $0.50 anyway. If I remember correctly, Google sends out the first check at $100 of income.

  3. #3
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    On online business works just like any other business, from a tax perspective. Google will 1099 you, yes. You don't have to go to prison unless you aren't willing to consult with an accountant or learn the rules on your own - it's not hard.

    If you have income that you don't report, then you might go to jail! There are minimum amounts that dictate when an outside organization has to report how much THEY paid you, but you are always responsible for reporting all of your income. Unless you make so little that you don't have to file taxes at all, you have to report everything.
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
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  4. #4
    phpLD Fanatic bronze trophy dvduval's Avatar
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    I usually get some pretty decent reports from my bank and my paypal accounts. In addition, we keep a daily log as backup. Then we take this to the accountant. We usually make a couple of trips and ask the accountant a lot of questions to make sure we aren't missing anything.

  5. #5
    SitePoint Addict MrBaseball34's Avatar
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    So, it makes sense to get an accountant and keep track of every penny...
    MrBaseball34
    Hook'Em Horns!

  6. #6
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    If you know what you are doing, you don't need an accountant and many people do it on their own. Most of them don't know what their doing, and would save more in taxes than a CPA would cost, but people just can't seem to get their head around it.

    If your taxes are very simple, you could use TurboTax or some other software which is sort of like having an accountant that has a gun to their head held by the IRS. It's very, very, very, very, very conservative and a good CPA can usually find lots of ways to reduce taxes that TurboTax will skip because it's hard to codify the rules to that extent. But, if you have simple taxes or don't earn much, it can be ok.

    As for keeping track of every penny : YES. People who count receipts, let the bank or paypal categorize their expenses, etc are probably missing out or filing inaccurate returns. There is no substitute for keeping track of every expense/income and it's easy using Quicken, MS Money, Quickbooks, etc. Remember, if the IRS audits you then YOU are responsible for any mistakes in reporting - the accountant is responsible if they screw up the accounting, but if you give them bogus or inaccurate data it's your problem.

    So, unless you want to cheat on taxes, why guess? Counting receipts is ok, but you might wind up accidentally missing deductions, losing receipts, or having them mis-categorized in either way you lose out.

    Keeping track of over penny good business anyways, so it's good all around!
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
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