I'm a total n00b affiliate marketer. Hell, I didn't even abbreviate it as AM. That's how damn n00b I am.
That said, I have been in offline business for 12 years. I've been sued, had the FBI walkin and want to review our files (totally not our fault - same company name as another company), had the IRS garnish wages on contractors - if it happens, I've pretty much seen it.
If you're making cash doing AM - anything over $600/ year (I'm setting the bar low here...) - you might want to read this. Ask me questions too.
Taxes and Quarterly payments: If you make money as a 1099 (contractor), business owner, sole prop, parter in a corp, etc - you need to pay quarterly payments. Pretty much any time you are making cash and NOT working for someone else.
You are supposed to pay in 25% of your tax payment for the year quarterly. This applies to both state and federal. This can get tricky because you might not make shit until December and then make bank like crazy mad for 30 days. If you didn't pay in the first 3 quarters the IRS will often penalize you for not paying taxes on time. You have no choice but to bend over and take it.
It gets even more fun if you "do business in" a state they may want you pay taxes. For example - I was doing work for my company which was owned and located in ND. I was on-site in Minneapolis doing work for the Federal Government. The state of MN made me pay income tax. Fuckers. The lines with computer related work are getting more gray all the time. Hire a CPA - it's worth it.
How can you decrease tax liability? This is easy - get some expenses. Here's a quick list of the things you can expense in the AM business - but you have to have receipts - originals - always.
I also recommend the following if you are doing this long term:
I just had a kick-ass year. What else can I do?
The IRS says you are "paid" when you receive a check. So even if you don't cash it you have to count it as income.
Let's say you had a banner year. You came, saw, kicked ass, and took names. But you know you're having surgery or vacation or who knows what the fuck the next year and it won't be so great.
Call up your vendor/AM manager/whoever and hold payment until the new year if possible. I think you can do this for 90 days, so you might not get paid for a while (you didn't spend ALL that mad AM money on hookers and blow did you?).
They might need to pay you before the end of their fiscal year. Have them send you a check this time - mailed on the last business day of the year. If necessary take vacation so you can't check the mail. That way you won't "receive the check".
There's lots more things you can do. I'll stop there. All of the above is legal by the way but don't hold me responsible if you don't get a lawyer and a CPA and you try this.
That said, I have been in offline business for 12 years. I've been sued, had the FBI walkin and want to review our files (totally not our fault - same company name as another company), had the IRS garnish wages on contractors - if it happens, I've pretty much seen it.
If you're making cash doing AM - anything over $600/ year (I'm setting the bar low here...) - you might want to read this. Ask me questions too.
Taxes and Quarterly payments: If you make money as a 1099 (contractor), business owner, sole prop, parter in a corp, etc - you need to pay quarterly payments. Pretty much any time you are making cash and NOT working for someone else.
You are supposed to pay in 25% of your tax payment for the year quarterly. This applies to both state and federal. This can get tricky because you might not make shit until December and then make bank like crazy mad for 30 days. If you didn't pay in the first 3 quarters the IRS will often penalize you for not paying taxes on time. You have no choice but to bend over and take it.
It gets even more fun if you "do business in" a state they may want you pay taxes. For example - I was doing work for my company which was owned and located in ND. I was on-site in Minneapolis doing work for the Federal Government. The state of MN made me pay income tax. Fuckers. The lines with computer related work are getting more gray all the time. Hire a CPA - it's worth it.
How can you decrease tax liability? This is easy - get some expenses. Here's a quick list of the things you can expense in the AM business - but you have to have receipts - originals - always.
- Home internet service
- Home phone (or cell - or both)
- All outsourced work
- Any travel costs (ie, go to the conventions, it's an expense)
- Office supplies
- Anything remotely computer related, including subscriptions to websites
- Business magazine subscriptions - and if you're selling "teh berries" then any health/fitness magazine subscription you need for "research".
- Office space as a % of your total home payment
I also recommend the following if you are doing this long term:
- Hire a lawyer and CPA. Have them meet for #2 below.
- Have a lawyer create an LLC or S-Corp for you - they need to decide which fits your situation best.
- Become an employee of the Corp
- Pay yourself a salary that is as low as possible. Usually the same amount you'd have to pay a code monkey to do your job (for AM, that's probably $50-100K depending on where you live).
- Take all extra cash in distributions/dividends
- For bonus points have your lawyer draft a lease for your home office space from you to the corp for $1000/month. That $12,000 yearly "expense" from the business will transfer the profit to you personally instead of the corp. Since it's rental income it's taxed very low.
I just had a kick-ass year. What else can I do?
The IRS says you are "paid" when you receive a check. So even if you don't cash it you have to count it as income.
Let's say you had a banner year. You came, saw, kicked ass, and took names. But you know you're having surgery or vacation or who knows what the fuck the next year and it won't be so great.
Call up your vendor/AM manager/whoever and hold payment until the new year if possible. I think you can do this for 90 days, so you might not get paid for a while (you didn't spend ALL that mad AM money on hookers and blow did you?).
They might need to pay you before the end of their fiscal year. Have them send you a check this time - mailed on the last business day of the year. If necessary take vacation so you can't check the mail. That way you won't "receive the check".
There's lots more things you can do. I'll stop there. All of the above is legal by the way but don't hold me responsible if you don't get a lawyer and a CPA and you try this.