Hello,
Well it's tax time again. Yeah....
Today I'm going to keep things short and sweat. You've
probably got more important things on your mind today if you're
like me.
If you've already filed your taxes, well, I don't like you very
much right now.
I suppose it's fitting to talk today about taxes and the role
they play in your Internet Business.
First off, I should stress that I'm not an attorney or a tax
advisor or CPA, so take my suggestions with a grain of salt.
Always consult with your own accountant and or lawyers.
SO! You've been reading my little newsletter for a while now,
you've been following my advice, and sales are starting to
pour into your business.
Great!
The only problem is, the more money you make, the more taxes
you're going to have to pay.
Especially if you're "self-employed", which many of you
undoubtable are.
I think a single self-employed person pays like the highest
amount of taxes out there. You have to pay a 15%
self-employment tax, then you have to pay regular income
tax on top of that. Blah.
Most people, when starting an Internet business, work first
and hardest on creating the business, getting sales, defining
markets etc etc.
Most people don't think about or plan for taxes till it's
the end of the year and too late.
When you decide to start an Internet Business, the first thing
you should consider are your taxes.
What does that mean?
Well, you need a tax strategy from day one. Otherwise you'll
find most of your profits go straight to Uncle Sam.
First and foremost, you need to decide what kind of business
entity to create. Do you become "Self-employed", do you form
a "Corporation", a "Partnership", an "LLC"?
Determining what kind of business entity you create will
determine how you pay taxes (among other things).
Most people don't realize that you can form a corporation
fairly easily. It costs like a hundred bucks to file the
papers with the secretary of state.
Then you call the IRS to get your employer identification number
(which is kind of like a social security number for a business)
and away you go.
Go to the book store, buy a couple of books on forming a
corporation. Read through them. Start to learn about the
different tax advantages to forming a corporation.
Then meet with your CPA (certified public accountant) and
ask him to go over everything with you. Ask him if forming
a corporation will help reduce your tax burden. Ask him
to discuss the pro's and cons of it.
With a simple tax strategy in place, you can reduce the amount
of taxes you owe down to virtually zero.
I'm not talking about illegally avoiding taxes here, I'm talking
about taking advantage of the legal deductions that the IRS
allows to small business owners.
Basically what I'm trying to tell you is to form a good working
relationship with your CPA. Ask him/her questions, get advice
regularly.
Many people who start Internet businesses overlook this
very important part of the business and end up paying far more
in taxes then they are supposed to.
And that's all I'll say on that.
See you next Monday!
-John Skorczewski
