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  1. #1
    Affiliate/AM Moonlighter dflsports's Avatar
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    Hello All! I was wondering how other affiliate marketers handle taxes? And do you have business licenses, DBA's or what? I just started making enough money that these are issues that I am thinking about (plus my better half is worried the tax man will cometh for us if I do not figure it out).

  2. #2
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    Great question! I'm curious to hear how everyone else structures their business too. Personally, I filed a DBA and just use excel to keep records of income and expenses. At the end of the year I give it to my tax guy and he fills out all the forms (1040, schedule C, etc.) and I write a check.

  3. #3
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    You are really going to have to check with the local tax department or accountants. Many issues will come into play but vary according to where you are
    In my part of Canada, they do expect income to be declared, but variables are in place to decide if it is a hobby, or a business where reasonable expectation of profits are expected. If a hobby and no income declared, no deductions allowed. If claiming it as a business and business income, deductions are permitted for lots of busines related expenses. Way too complicated without speaking to proper local tax people or an accountant. Last thing you want is the tax man on your case.

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  4. #4
    Affiliate/AM Moonlighter dflsports's Avatar
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    Thanks for the responses. I have treated this affiliate stuff as a biz and have used things like web hosting, domain name registrations as deductions the past 2 years. If anyone is from NY and has any good info, please share.

  5. #5
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    I got a business license soon after my site went live. When income started coming in, I then opened up a dedicated business account, where all affiliate income is deposited (to keep it seperate from any other income, which right now, is none!).

    Every quarter I then pay estimated taxes on the earnings, so as to avoid the penalty and to prevent from having to write out a huge check at the end of the year.

    I use an excel spreadsheet to keep track of all income and expenses. And Quicken to keep track of my business checking account.

    Jim

  6. #6
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    Who are the people to talk to regarding the finances and taxes in a serious affiliate biz?

    Do any of you consult a lawyer or accountant for your affiliate business? How do you go about structuring your affiliate biz in view of taxes?

  7. #7
    ABW Ambassador FFoc's Avatar
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    In the US, you can declare it hobby income under $300 or so (ask your accountant), which can be offset by "hobby expenses", but definately have to declare as regular income over $600 (at which point you get a 1099 from your merchant/network if all is earned there) and pay "self-employment tax".

    If NY has a state personal income tax, you'll have to figure out how they want it handled (WA doesn't)..

    If you incorporate or DBA you definately have to pay state and federal taxes on the income, but that may be cheaper for you than if you didn't.. Again, see a local accountant..

    --
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  8. #8
    ABW Ambassador Jane's Avatar
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    I have a DBA, biz bank account and biz credit card. I am lousy at keeping up with paperwork so the seperate accounts allow me to track every cent that comes in and goes out.
    I priced several accountants and they wanted too much money. I find turbo tax works quite well.

  9. #9
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    I brought this same topic up around a year ago (probably last September/October) and received some great reponses. Myself, I have a DBA on file with the state, as well as a local business license. Check your local laws to find out what you really need. I don't have a separate business account. If and when I have a greater income from my affiliate marketing business, I'll open separate accounts and hire an accountant. For now, I'm a sole proprietorship and am happy with it.

    Three little pieces of advice, though. Keep records, keep records, keep records! I'm trying to catch up from bad record-keeping the first part of the year. I'm all caught up now, but it wasn't a fun job to do. Keep track of all expenses that may be deductable--webhosting, domain name registration, search engine submissions, etc.

    Michael

  10. #10
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    What's a DBA?

    The only DBA I can think of is a database administrator.

  11. #11
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    It’s usually lower case d/b/a means a sole proprietorship.
    An individual doing business as a company name but not incorporated.

    Mary

  12. #12
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    Hey DFL,

    Good question, and as others have mentioned it is good to try to get a system set up so when purchases are made or income come in you can then keep track of it.

    In all honesty I feel I could do a bit better at record keeping, I am not bad but could be better.

    I have an accountant help me out with taxes and all. Last year I made a bit more in my affiate biz than I did working as a chef for 11 months (I quite the chef gig in nov of last year).

    I also make quaraterly taxes payments bases on LAST YEARS income and then save all the rest in an online ING account which yields about 2% intrest (much more than a regular savings account).

    I keep a excel spreadsheet that my wife helped me create, I am not that great at excel. I knew how I wanted the spreadsheet to read and work and my wife was nice enough to accually create it.

    One tab is for income, one tab is for business expense and another tab is used for tax calculations.

    One thing about being self employeed is that you pay higher taxes .... my accounted explained it as this. When you work for a company they split the cost of employe tax with you which is a total of 14% the employee pays 7% and the compnay pays the other 7%. So when you work for yourself you need to pick up that other 7& ...

    Basiclly I pay about 50% of all I make to uncle sam, so I pay "estimated" taxes quaterly and then place the rest of the income that will be owed into that ing account ... this makes me a bit of cash by the end of the year. Prob about $500

    The important thing to do is to keep records as mentioned every time money pass hands, weather it is coming in or going out. Keep your recored updated so at the end of any given month you can easily see how much you spent on expenses and how much came in. This will let you track your earnings and "estimated" taxes for the end of the year.

    Hope this helps ;-)

    Brian

    Brian Johnson
    Seek and you shall find

  13. #13
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    As far as doing business without being incorporated you are risking all your assets your home etc.

    You people should think about getting incorporated.

    I highly recommend Incorporate Time

    Good price and quick,

    Mary

  14. #14
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    Hi,

    Once I started earning a decent amount I consulted with a lawyer and an accountant. I set up a sub-s corporation for about $300. All commissions, expenses, etc. are in the corp's name.

    I keep an excel spreadsheet of all commissions earned, commissions collected, and expenses. I send the reporting monthly to my accountant. I have to submit quarterly payroll deposits, etc. but the extra hassle will more than be made up by tax-savings.

    Depending on the income you are earning, I recommend setting up a corp. if the earnings less expenses will be substantial (basically, anything over $5,000 in a year). The cost of around $500/year for the corp. should be saved because you can get away from the additional self-employment tax (which I believe comes out to 10-13% of the additional $$ you earn.)

  15. #15
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    I would avoid any online incorporation site, you are paying for nothing.

    In the USA, contact your state Almost everyone has a small business help program. Your taxes are paying for these programs, use them. Call them up, talk to them, they can direct you where to fill out the forms or send you paper forms. There is ZERO benefit to going to one of the online incorporation sites. ZERO benefit.

    If you want consultation, go to your accountant or lawyer. You should at least have an accountant at this point if you are looking to incorporate. They should be able to advise you on which structure is best for your company and you account will most likely do this for free.

    If you want to avoid payroll taxes and the nightmare of associated paperwork, I suggest forming an LLC. An LLC requires about 1/100 (I am not kidding) of the yearly paperwork a S or C corp does.

    Chet

  16. #16
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    As an example of what a scam* the online incorporations sites are.

    If you go to:
    https://www.incorporatetime.com/OrderLLC.htm
    They say the state fees for an LLC in Ohio are $225. That is incorrect, the fee is $125. What do you get for the extra $100? NOTHING!!! Stay away from online incorporation places, they are scams.

    Chet
    *I am basing my use of the word scam on the idea that paying an extra $100 as "state fees" - seems scammy to me. YMMV on what you consider a scam.

  17. #17
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    I would highly recommend Quicken. A very easy way to track income, expenses, etc. In addition, you can create really insightful reports and graphs which show how your business is performing. really cool stuff and so easy. I hear it really makes tax-time a breeze since it already has most of your pertinent info.

    woops, didn't mean to sound like a commercial

    Sal @ PHATBargains.com

  18. #18
    notary sojac Herb ԿԬ's Avatar
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> If anyone is from NY and has any good info, please share. <HR></BLOCKQUOTE>

    Hey, I live about 40 miles south of you so I guess I qualify . . .

    No. 1 forget this dba business unless you are selling to the public in your own county. DBA stands for "doing business as" and refers to your assuming a business name not your own. If you don't put up a shingle in your home county you don't need it. In fact, the less you are visible, the better.

    No. 2 keep good records of business expenses. You are known to the taxing authorities by W-2s and 1099s you receive as evidence of income. At the appropriate time declare the income and let the expenses offset it. I get the feeling that if a network or advertiser didn't generate enough income during the year* ($600 or more) then it is up to you whether to declare that as income.

    In our area, people are fond of talking about "business permits". But there is no such thing here except for maybe food service.

    _____
    *and because of that they didn't issue a 1099.



    _____
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  19. #19
    Affiliate/AM Moonlighter dflsports's Avatar
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    Again thank you for the great advice. NY sucks when it comes to small biz. I used to live in Georgia and had a DBA, biz license and account and it cost less than $100 to get going.

    I think it is about time to start an excel spread sheet (my wife is an accountant and you can imagine how mad she gets when tax time comes)

  20. #20
    Affiliate/AM Moonlighter dflsports's Avatar
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    Just another quick note, I did find a Small Business Development Center, funded by the SBA (small business administration see http://www.sba.gov/) in my area tha offers free consultation. Going to try out their service.

  21. #21
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    Chet,

    I don't recomend scams!

    Perhaps if you would READ the same page you link to! it clearly says what that fee includes

    Our fee includes:


    Preparing and filing all necessary documentation to form your LLC.

    Name search and availability

    And Payment of state filing fees

    So they are charging $100 for all the paper work and doing a name search. Would you expect them to do it for free?

    A retraction is in order

    Mary

  22. #22
    ABW Ambassador DesignerWiz's Avatar
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    I also must say that I do not believe that paying $100.00 fee for a legal business registering service is "scam".

    Consider the expenses these services must assume to ensure the integrity of their service and ability to deliver a legal binding business registering service.

    I assume nearly every serious visitor seeking information on legally registering their own business identity are going to look for validation of the sites claims to deliver what it says they will. They expect to see the service itself is a legally registered identity, has verisign seal (or equivalent), secured payment area, reasonable contact points (both email/phone), etc.

    All these expected features all come with added expenses to these services ... not to mention the liability insurance the services must have for coverage of any future claims of improper registrations, etc. issues. Try going to your lawyers office and see if they will do all the proper research/registration aspects for you for $100.00 and see what they say and be prepared to fall over.

    In my book ... $100.00 is very reasonable.

    Ray Thomas
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  23. #23
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    I stand 100% behind my use of the word scam. I suggest you read the page carefully. Click on Ohio - what fees do you see listed on the right?

    THEY LIST IT AS A STATE FILING FEE. NOT AS AN ADDITIONAL OR AGENT FEE.

    That is misleading.

    Also, they do no more than what you could do yourself by going to ohio.gov requesting a packet and filling out the included excel spreadsheet or printing out and filling out the documents.

    These services offer no professional oversight, guarantee or warranty to their service. They prey on the uninformed. There IS NO NEED to ever use one of these services. They do not offer you legal or accounting advice and say so repeatedly. They just fill out the same forms, in the same way you do.

    So if throwing away $100 on something you don't need and is misrepresented isn't your idea of a scam - well then, that is why i put a disclaimer on my first message.

    Chet

  24. #24
    Web Ho - Design B!tch ~Michelle's Avatar
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    I add all my affiliate income into my business income. I have a graphic & website design business that I have a dba for along with a business account.

    I play it safe and claim every cent I earn, whether it be 6 cents of 600 bucks.

    I claim all domain name registrations, hosting, PO Box, and a percent of my electric, phone bill, heat, and mortage, and internet bill as expenses, along with office supplies and software that I use. I also depreciate my computer and all of my other office equipment.

    I don't mess around with paying quarterly. I just keep on eye on the income vs the expenses and have a general idea what I will owe, if anything.

    ~Michelle

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  25. #25
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    Chet,

    Your the type of person who is not frugal your just cheap.

    You probably do your own tax returns.

    I have alerted them of your accusations.

    Mary

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