“But in this world nothing is certain but death and taxes. “
~Benjamin Franklin
So it’s that time again here in the U.S. – tax time! As an internet marketer, documenting all of your expenses is very important if you want to use them as tax write-offs. This article is aimed at those that do most or all of their business online, but any business that has an online presence should be aware of the expense claims related to their online presence. In this article, we will look at a few things you will want to keep in mind, when getting your information together, consulting with a tax professional being one of the big ones. Also please note, I am not a CPA, Enrolled Agent or Accountant. The information I am providing here is for your information only. Laws vary somewhat from state to state, so you will want to have the professional advice of someone in the know, but these guidelines will help you cover the major bases.
Most importantly, you will need to keep thorough records of every expense and every transaction. I make note of every penny that comes in, and keep receipts of everything. I use the free online accounting tool Outright, to keep my records nice and tidy. Without an accurate accounting of your income and expenses, it is impossible to take advantage of all the incentives for doing business online. Even if you think that a receipt may be unimportant, if it has anything at all to do with your business, you should keep it and file it. Every cent is important, and when counting your deductions, those pennies add up. Keep track of your mileage, gas expenses, and pretty much every penny that moves in or out of your business.
Brick and mortar business deduct the rent or mortgage for the property the business conducts itself in, so if you use the internet for your business, you should take advantage of as many internet marketing tax write-offs as you can. Your web presence is rented space as well, with a domain name and a server that are, for all intents and purposes, the virtual location of your internet presence. Deduct it. Your internet service is a business expense as well. Also, if you run your business from home, you can deduct a percentage of your home’s rent or mortgage too. Talk to your accountant about the specifics – there is a complex formula to figure this all out, and a competent professional should be able to help you maximize your internet deductions.
Advertising expenses can also save you money at tax time. If you pay for any marketing, whether it is with adwords, Facebook Ads or any paid advertising on (or off) the net, that expense should be tracked and claimed to the fullest potential. If you run ads in the newspaper or in the yellow pages, you should claim that expense, and if you post flyers in your community, it would be wise to deduct the expense of design, printing and distribution of the advertising materials.
There are other miscellaneous expenses that can make good internet marketing tax deductions. If you purchased a computer in the last year, or if you use a video camera or digital camera for your business and bought one in the last year you should take that expense also. Software, scripts, WordPress plugins, and any outsourced work such as articles used for backlinking should also be included.
Gasoline, business related mileage – even if it is just to the bank, and if you use your vehicle to advertise your website, you can claim some of the car payments on your expenses too. Keep all of your expense records, and claim as much as you can. As discussed before, always take your accounting to a tax specialist or CPA to insure that you are in compliance with the tax laws that apply.
Education is deductible as well. If you spend money on information for the purpose of educating yourself or those who work for you, you can usually deduct all or some of that cost from your tax liability. Some examples of this would be eBooks , seminars or memberships to websites such as The Keyword Academy. If you do a fair amount of business online, there are probably numerous subscriptions that you utilize to gain advantage in the competitive and sometimes confusing world of internet sales.
Want to learn more? There is a very good book entitled – Home Business Tax Deductions: Keep What You Earn, that is very helpful. You should definitely check it out!
Here are some of the things I will be deducting this year:
- Internet Access – In order to run a business online, I need internet access, so this is definitely a tax write-off.
- Domain Names and Web Hosting Fees – without these things, I would not be able to have a presence online.
- New Computer – I purchased a new, faster, more powerful computer last year which definitely qualifies as a tax write-off.
- Software – word-processing software, virus protection, and keyword tools are things that can be deducted.
- Link building services – I use Build My Rank and a few other services for link building, so I will be deducting the subscription fee.
- Outsourced Articles – This is a huge expense for me. I have outsourced hundreds of articles in the past year and will definitely be using this as a tax write-off.
- Subscriptions to paid membership sites – I am a member of the Keyword Academy and will be deducting the monthly membership fee.
- WordPress Plugins – I don’t purchase a lot of plugins, but if you do, you may be able to deduct the cost.
- eBooks – eBooks can be considered to be educational expenses if the particular eBook is teaching you something that is helpful for your business.
- Travel to and attendance at Seminars and Conferences – another great tax write-off.
Did I cover all deductible expenses? Am I missing anything? Let me know.
-Diane-
