Question about taxes and write off

[dgfalk]

This year I didn't make enough money to worry about paying taxes on but starting next year Ill have to pay income taxes on my adsense and amazon earning.

My question is what can I use as a write off and what documents do I need to start saving? Can I write off monthly internet fees, hosting fees, domain registration, outsourcing, etc... If so what do I need to start saving as far as paper work goes? Basically I just need some general info so I can be ontop of my game when Janurary rolls around.

 

[PeeWeeDee]

Depends

Since you are running a business of you own: here what you write off, Hosting fee,internet/phone bill, cell phone (if you use to conduct business) advertising cost, (printer ink paper) If you taking clients to dinner that too.

 

[tb0n3]

First, if you have not already done so, I recommend opening a business account seperate from your personal account. This will allow you to more easily track expenses related to the business.

In accounting and tax, there is a principal that you will find useful. It's called the matching principal. Anytime you have a source of income, there are expenses or an investment that accompanies that income. Track any and all expense that are used to help you generate your income. So if it is hosting , domain registrations, outsourced development fees, or breakfast with your neighbor Bob to get his input, track the expenses. Anytime you incur the expense, use the debit card associated with the business account if possible. DO NOT USE the business account for personal expenditures. At the end of the tax year, you know that all withdrawals to that account are for expenses or distributions to yourself. Any deposits are either income or money you invested.

 

[dgfalk]

^Thanks A couple months ago I did open up a separate savings/checking account that at first I pretty much just used as a secondary savings account. I put like $1000 into it and now Im just using it to pay for all my IM related stuff, so, so far it looks like im on the right track.

As far as tracking expenses whats the best way to do it?? Take for example my monthly hosting fees, do I need to go on their website and print out an invoice every month, or at the end of the year do I just show my tax guy my bank statements and say "hostgator.com took out $10 every month, deduct that"? What about outsourcing stuff, I pay all my guys using paypal, how do you document that cause anything can be bought with paypal.

Also are there any good forums about this topic, i tried looking but couldn't find anything decent at all about running a home business.

 

[jwzzrfl]

^Thanks A couple months ago I did open up a separate savings/checking account that at first I pretty much just used as a secondary savings account. I put like $1000 into it and now Im just using it to pay for all my IM related stuff, so, so far it looks like im on the right track.

As far as tracking expenses whats the best way to do it?? Take for example my monthly hosting fees, do I need to go on their website and print out an invoice every month, or at the end of the year do I just show my tax guy my bank statements and say "hostgator.com took out $10 every month, deduct that"? What about outsourcing stuff, I pay all my guys using paypal, how do you document that cause anything can be bought with paypal.

Also are there any good forums about this topic, i tried looking but couldn't find anything decent at all about running a home business.

yeah I have the same question to How can you use paypal transactions to write of expenses

 

[Outsidethebox]

First, if you have not already done so, I recommend opening a business account seperate from your personal account. This will allow you to more easily track expenses related to the business.

In accounting and tax, there is a principal that you will find useful. It's called the matching principal. Anytime you have a source of income, there are expenses or an investment that accompanies that income. Track any and all expense that are used to help you generate your income. So if it is hosting , domain registrations, outsourced development fees, or breakfast with your neighbor Bob to get his input, track the expenses. Anytime you incur the expense, use the debit card associated with the business account if possible. DO NOT USE the business account for personal expenditures. At the end of the tax year, you know that all withdrawals to that account are for expenses or distributions to yourself. Any deposits are either income or money you invested.

Thanks, This will help me for next year...

 

[Kosher1]

Great question, found this post on GOOGLE LOL!!! Well, nice comments....

 

[PigBenis]

Heres what I did This year as far as taxes go, Keep in mind the U.S. government is very lenient in the first 3 years or so for start up businesses. They don't expect you to make money (take that as a hint).

I deduct everything that is even remotely related to my business procedures. Such as
Hosting, Domain purchases, Renewals, Computer purchases, A Portion of Internet fees, Ink, Paper, Checks, Everything outsourcing (such as paypal purchases, backlinks, articles, xrummer etc...), Blank Dvds, Business Dinners (even the mention of the business). If I have to drive somewhere I will record milage and fule cost.

The One thing that I do not deduct are the portion of the house expenses that are allowed. Eventually I will figure it out and do that as well.

Keep all receipts. An Excell sheet comparing your income vs expenses and a separate checking account helps too.

 

[dbrownwebmaster]

If anyone is interested and has specific questions I will be glad to answer them. My family has been doing taxes for over 35 years. Also I've been building sites since 1999.

David Brown
404-953-5282

 

[mylar]

Also can go straight to the source, the IRS 800.829.1040, ask to speak to someone about 'home biz or sole proprietorship' issues but if you're a Subchapter S, LLC, C-corp or have a formal partnership specifically ask for an IRS Agent. Also this is where you can order free tax forms of all types.