About the only downside to being an Internet businessperson is that tax time can get complicated.
Depending on how you’re working online, you may have to deal with quarterly self-employment taxes this April as well as file your final return for 2009.
If that weren’t enough fun, you’ve got 1099 forms to deal with for any contract workers you’ve hired.
I firmly believe that the only business owners who should file their own taxes are entrepreneurs who are in the tax business.
But that doesn’t mean you shouldn’t have a basic idea of the kinds of deductions you could have coming, as well as a general idea of tax laws. After all, how else are you going to judge whether your CPA is doing right by your business?
With that in mind, here is a list of the kinds of deductions you may be entitled to. Keep in mind that I am not an accountant or tax advisor, and I am not giving you advice on how to do your own business’s taxes.
These are just the kinds of deductions that are most likely to apply to your Internet business, taken in part from a December 2009 post by Josh Spaulding on his blog:
Your computer. You may need to be able to show how much time the machine is used for business as opposed to personal use.
Travel expenses for any conferences you’ve attended. Also the fees for those conferences.
Freelancers you’ve hired to help with your business. Think of this deduction as the payment you get for filling out those 1099s.
Home office space. This is a tricky one—ask your accountant how it works.
Advertising for your business.
Fees paid to your Internet provider.
Mileage to any business-related meetings. If the meeting was at a restaurant, you can deduct some of those expenses too.
Of course, your taxes might also be complicated depending on the type of Internet business you own. For example, affiliate marketers have been in the news because states are increasingly trying to use affiliate businesses as a hook to require merchants to collect sales taxes. Amazon pulled the plug on the affiliate businesses in Colorado recently over just this issue.
One thing I’m increasingly encouraging my fellow Internet business owners to do as a result of these changes is to become more aware of the ways that tax laws can affect us.
Affiliate marketers in Colorado were able to force at least some changes to make that state’s law less of a burden. As states are increasingly crunched by the recession, it’s up to us as business owners to make sure our voices are heard in these debates.
You may not think you have a lot of power. After all, you’re just one person. But the fact is that single-owner Internet businesses fall into the most important sector of our economy—small businesses.
It’s up to us not only to do our taxes this year but to make sure that our Internet businesses can continue to thrive every year.