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  1. #1
    SitePoint Zealot nikola8's Avatar
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    Jun 2006
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    Help Me:Tax for US Online Entrepreneurs (NOT Ebay)

    Hi All,

    Can somebody help me with this Tax questions.

    All tips what I found on the internet are more
    applicable for e-bay business then for others.

    I didn’t find answers for next questions:

    1) Haw to show to IRS that your expenses are ordinary
    and necessary (Except advertising on some well known
    sites, paying for domain name or hosting )
    You do not have supplies, mileage , inventory etc,
    but you have to pay so many people somewhere in world
    for doing something for you (for small or big amount
    of $-s), without contract, or receipt. Can you tell
    that it is CONTRACT LABOR? How you can name it??

    You have to buy so many small software that most of
    them on the end will not work for you and you will
    throw them (will not have a proof that you have it)
    only that you have is PayPal record that you paid to
    somebody email.
    You have to buy so many e-books, reports to learn this
    business, can you tell it is Continuing education?
    Again you will have usually only PayPal record: e-mail
    to e-mali.

    2) How to do bookkeeping? What record to collect ? (in
    most cases except paypal record it is only e-mail
    correspondence. Do you need to define what expenses
    are for what your final earning or what your object of
    business. It is almost impossible because of so many
    things that you are doing and that this tings are
    For example: you pay for Adwords for a site
    on which you are selling your book but after few
    months you are going to sell the whole site - expenses
    are for bought the site and the book. If so you will
    spend more time to keeping information than to working
    on that what have to make you profit.

    3) In shedule C what to put on line A? (You are
    working in at least 3 NAICS Definitions of industry)
    It will be again impossible to file 3 C shedules.


  2. #2
    Follow Me On Twitter: @djg gold trophysilver trophybronze trophy Dan Grossman's Avatar
    Join Date
    Aug 2000
    Philadephia, PA
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    You need to keep records of every expense you want to deduct. A PayPal receipt is enough if it's clear what was purchased. If it's not, then you need to keep that correspondence or a copy of some part of the website identifying what you bought with that money. Your goal is to be prepared to show that the expense you claimed was actually paid and that it was something reasonable for someone doing whatever business you're doing. You'll be talking to a human being (the IRS examiner, that is), so you can explain things, as long as you have the evidence to back it up.

    As for the rest of your questions, I started replying to them all, but in the end it depends too much on the details of how you run your business(es). You need to find a good tax consultant/CPA and talk to them about all this. They're not that expensive... just buy one less piece of software to throw away and spend an hour with one instead.

  3. #3
    SitePoint Member
    Join Date
    Apr 2008
    Colorado Springs, CO USA
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    Insofar as records for all of those small purchases go, I simply create PDF documents of them (using a "print to PDF" solution) and save them with the purchase. If you then record the purchase, it's easy to go back and get the receipt later if/when it is needed.

    Tom Brownsword, CISSP®, GCIA, Security+, ITILv3
    How Can I Help You Better Protect Your Business?


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