I have a problem. Now it may not seem like a problem to some but I know that it is going to be a big one if I don't figure it out. I am on pace to do about $400,000 in sales with clickbank this year. Now that could change overnight but it has been consistent for 3 months now. My problem is taxes. I have no idea what the tax implications are going to be or how to best deal with them. I am going to consult a professional but wanted to know if anyone here has dealt with this issue in the past. I am especially interested in anyone who has topped $100,000 in a year. Thank you in advance for any words of wisdom. Greg.
I'm no accountant, but with that much revenue you will likely need to pay your taxes quarterly intead of at the end of the year. I am sure whoever you hire will immediately recommend forming either an LLC or an S-Corp to formalize your business. This will require you to pay taxes on a schedule based on previous years earnings. Congrats on your amaxing success...but don't get cheap on finding the help you need to stay legit!
...in a related story...search for "wesley snipes irs" to see what happens when you "forget" to pay your taxes.
If you don't have any problems with the bank cashing your cheques, then I think you shouldn't be worried about taxes. However, if you don't have a job(unemployed), then you need to do something
im also interested in this.. ive wanted to know the answer to this. say I wanted to make a product on how to lay floor boards in your home.. i go out and buy all the floor boards and tools.... now all of that should be a write off yeah? boards - $5000 tools - $2000 vid camera/misc - $2000 now you would need a company car to go and get all of this stuff right.... sorry to highjack the thread a little but its still tax related and am interested to know what others would think. Greg - think of ANYTHING to write off is all I can advise.
Swerd I agree. Anything you can write off you should. Some of the things I write off are: 30% of rent (I use one room as my office) 100% computer equipment Phone Bill Utilities (30%) Some dinners and stuff. Parking fees. And anything else I think the government won't get suspicious of. Just keep the receipts for everything; however, with 400k in revenues I would look into eagles325 idea. With an LLC or a Corporation you can control how much money you make and leave the rest in the business. A final piece of advice: Take an accounting class or two. I took business in college and now I'm so glad I did. If you don't think it would be good for you than go around to some businesses that you frequent and ask them about their accountant (always best to get reviews). Than go visit them and ask them to get your accounting in order. Hope this helps.
Try to talk to an accountant to try and setup quarterly payments of taxes for you. Have all your expenses well documented with proof, you can claim a lot, you can also get this free e-book by Joel it might be helpful at mlmtaxbenefits.com
Definitely talk to a tax lawyer. I'm guessing your legal status(tax wise) is sole proprietor. Sole proprietor is fine when you're not making that much, but when you start making huge sums of money, it's best to incorporate. When you're a corporation(most likely LLC if you're in the US), you pay yourself a salary and you pay tax on that, than the corporation pays taxes on profit. The great thing about it is if you get rid of the profit before the fiscal year ends you pay very little in taxes. Basically, if you're a corporation, with a profit of $400,000. You can pay yourself a $50k for a the year. You'll pay regular taxes on it like a job. That will leave you with $350,000 left over. If you don't do anything with it, you'll probably pay about 30% tax. But, since you're a corporation, you could go out and buy a $300,000 piece of real estate. Your profit would become $50,000 and you'd only pay like $15,000 tax on that. What you want to do is talk to a lawyer that specializes in taxes. They'll suggest becoming a corporation and get an accountant that knows how to do the corporate taxes and they should be able to help you move around the money and lower your tax burden significantly. Hope this helps.
This is what I was hoping. I just have to find out some specifics like does the profit that is being spent have to be for the business. Example if I pay off some debt (cars, mortgage) that is personal. My guess is that would become taxable. Thanks for all the advice so far. I will be consulting a tax lawyer soon. Although the idea of Qtrly taxes sucks. G
Basically if your car is needed for business, than you can write off something. It depends. Cars are considered an asset and you write depreciation and car loan interest. I guess it depends on where you live, cause that determines the laws. If they're just your own personal items, you can't write them off. If you're a corporation, you could be arrested for such things(you have to legally pay it to yourself first). There's a lot of interesting things you can do with a corporation, and it's best to have a lawyer answer them. Like you could have your corporation buy your house and you pay rent to the corporation for it and that leaves you in the position to write off your house, property tax, maintenance, renovations as expenses. It's best to do it with a lawyer, they know how to structure it all. Also, make sure you get a lawyer that is a prick and a**hole. They're the best. You want those types of lawyers working for you and not against you. Good luck.