1 thing EVERY newbie needs to do RIGHT NOW...

Tiddlywinx

Tiddlywinx

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This doesn't just apple to newbies, either.

Get your tax stuff in order! Keep track of your income and your expenses, and actually file that stuff... Don't put it off because you "don't understand it", FIGURE IT OUT! Even if you hire an accountant, you need to have a basic understanding of this stuff. For the first year or two you should easily be able to keep track of it yourself, then look into hiring a bookkeeper and an accountant eventually.

Set up a business, even if it's a sole prop., just do things right from the get-go and you'll save a ton of headaches down the road...

Thoughts?
 
I agree. I think its important to print every receipt and file it in order as you go, or at least stack them in order next to the printer and file them in batches. But you should also enter the transactions in some kind of software so you can quickly run totals and have records for tax time.

I know people who go on the road for a living and half of them don't bother recording gas costs, mileage, meals, etc. Huge tax deductions they are missing out out of sheer laziness or willful ignorance of not wanting to learn about it.
 
This isn't even something I'd considered just yet. I read that in the USA you only have to report the money if it was over $600 from any one source. Or rather that they report YOU to the IRS and you better report it then. I don't get over $600 a year from any one source, but I do get less than that from a few. Soon though, I will conquer it all... Soon...
 
Yeah get on this if you aren't already. It's insane how many people make money online but don't treat it like a real business at all. It's sad.
 
thamonsta said:
Yeah get on this if you aren't already. It's insane how many people make money online but don't treat it like a real business at all. It's sad.
Click to expand...

That seems to be the core of almost every internet marketer. It used to be easy, not really "Business-Like". But now it's not like it was. Spam doesn't take you as far as you'd hope and then you lose it. It's truly a business game now. This mindset seems to be the key limiting factor for 99.9% of people. No shortcuts here!
 
Tax is a really confusing thing for most people I'll admit I had trouble my first year, it's some solid advice though and to be honest if you lose a few outgoing receipts it's not the end of the world.

IF you lose incomings though you're going to end up in some serious trouble if you're making a decent income every year.

My advice is to keep a running log on Excel as well and update it every month, then file the paper side away and when it comes to tax time you can just cross reference the two along with a big old bank statement.
 
I will share a small thread about simple accounting not the usual complicated stuff, just a simple strategy I used mixed with some of the essential parts of accounting.
 
Well said, this is something not many people think about when starting online.
 
I have been using a sole proprietorship for years. So easy to set up and those tax deductions really help at the end of the year.

I run all my expenses through paypal. That way I know that every dollar that flowed through there can be deducted as well.

This setup has been good to me but it's time for me to step it up for 2015. It's time for me to hire an accountant and form a more official business. That's one of my most important to-do's on the slate for next year.
 
Totally agree, make sure you keep all invoices folders are not expensive, excel isn't hard to use it will come back to haunt you in the future believe me!
 
Here is some hints before I share my thread.

It will consist of five steps :

1- Calculate your budget (starting budget).
2- Registering your costs and revenue each day or month (I recommend days) "Journal Entries".
3- Arrange by general ledger, so you make sure to have the exact numbers calculated for each ledger.
4- using "Trial balance" to find "debit" what comes in,"credit" what goes out in total.
5- If the step before give us incorrect or no balance between "debit" and "credit" we need to fix it by repeating the steps before.

You can use Excel or any kind of software to make it easy on you, accounting usually has nine steps, I just put three here because they're essential to calculate your charges and gains.

These steps are for people who don't like to calculate much (lazy folks), also made to help people whom like to not waste much time on accounting.
 
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Accounting was something I never kept on in one of my businesses. Three years passed, we got some major orders and transactions increased. I let it slip to the back burner, then to the dishwasher, then to a storage unit.. no good! Took me months to catch up and get straightened out to know what money went to what place and where it was going. Great thread topic and heads up!
 
I always hire someone to do my taxes but throughout the year I keep track with quicken home and business also, if you have local clients make sure you track meetings and dinners I also, use fresh books for billing cleints. Of course save those receipts I am in the states so we know how evil the taxman can be. Do not forget in the states you can write off office space in your home, your Internet bill, cellphone and more. Consult a tax attorney to make sure you know all the ins and outs.
 
I would also add that it might be worth considering creating an LLC for the long term. I'm not a tax attorney, so take my words with a grain. I have started my own business and LLC before, so I do have some experience with that. As a single member LLC, in many cases, the "business" does not have to file federal income taxes, and that income is simply reported on your federal taxes as a Schedule C. You'd have the benefits of added liability protection from the LLC, reporting the additional income on your federal taxes wouldn't be that much more complicated, and you would also have another legal entity name which you could legitimately use for various purposes. For example, grab a P.O. Box, maybe even sign up for a virtual office plan with someone so you can get a physical address, phone/fax number, answering service, etc. There are a lot of different things a person could do with all of that which might be beneficial for certain IM purposes...
 
@Hitman-Zone has this down. My wife does bookkeeping and finance management for a small firm and has some bookkeeping clients on the side. We started keeping track of all expenses for any SEO, SEM or IM stuff that I have been spending through Quickbooks. You really never think about Credits and debits until you see them on paper. You'll be amazed how quickly you'll blow through $100, $200, $500, $1000 of buying domains, links etc.
Also another consideration people should take into account is do you want this income to reflect on your overall income (for of those of you doing this on the "side")? This has helped my wife and I purchase our Second home because we correctly showed balance sheets, general ledger, budgets, etc to our loan officer and they eat it up like cake. Lenders will jump at an opportunity to lend to you when they see additional income outside of your main source of income. Give Quickbooks a try, and definitely pay a bookkeeper if you are ballin in SEO/IM. The little amount of time and effort it takes a bookkeeper to enter in your expenses will save you tons of time and money down the road when you meet with your accountant to do you taxes. Bookkeepers generally charge anywhere from $30-$80/hr. Its worth every penny. Lucky for me, my wife does it already for her primary job, so doing it for my business is a cakewalk.
 
Don't rule out creating or moving businesses overseas if your in the US. Some countries can have as low as a 10% tax rate. Be sure to get a good accountant or someone that knows what their doing to help you out.
 
@red_devil010 I talk about that tutorial cause I see starters don't know how to manage their money effectively, 30, 80 bucks an hour is too much for a newbie, cause they need that cash. If you see that I will waste people's time I can cancel that thread.

Not all of us can afford that cash for each hour, you know and accountant can take up to five hours for just a simple list of general ledger, you can calculate that you will have at least $400 plus just to solve some stuff you can handle yourself, by just using half an hour each day, and you can pick a day on each month.

If you don't have an accountant, or you do accounting, you can't know your business expansion...
 
@Hitman-Zone I was not arguing against you - i was supporting your statement and what you should do. Bookkeepers aren't accountants. They are not legally allowed to submit taxes etc Accountants however are allowed to submit taxes, thus giving them the right to charge as much as they want. A bookkeeper keeps your books together - anyone can do this, like you mentioned, with Excel or Quickbooks or whatever software they want. I recommended quickbooks as a cheap and effective way to track all expenses and debit/credits. I would love to see a thread about how you do it! Please share :smile:
 
@red_devil010 I do accounting using all steps, this tutorial isn't real accounting, just a shortcut tricks you may need if you don't know accounting, cause it take time and effort to do all those steps, some are annual like step one (transactions) and the last one (post-closing trial balance) of these nine steps (it depends how you break those steps it may be eight or ten), some are everyday practice, like the third step, and so on...
 
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For my US biz, I've used Wave Accounting. I think it's still free for everyone (it's free for me). Pulls in data from various accounts so the numbers are at least staring you in the face.

Macros: have you set up anything overseas? I've done a ton of reading on it, seems straightforward as long as you avoid the pitfalls and don't need all the profits from the business to live on.
 
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