How do they run an Ad Network legally?

[TheBlackHatBud]

Hey guys,

I was just thinking how ad networks run legally?

For example, lets say I make $5,000 a month with "xy" ad network, how do they pay me? I mean most of the networks don't require me to send back any invoices. How do they certify their expenses to their publishers?

As far as I know, if I would be an owner of an ad network, and I would not require invoices sent back to me from my publishers, I would have to pay the taxes on all the ad revenues, and then pay out my publishers = that would kill my profit.

Please someone lighten me up! I'm kinda stupid in stuff like this.

Thanks!

 

[imperial444]

Most networks report to IRS if you are from US, if you are not from US you should have pay your local taxes.

 

[TheBlackHatBud]

Thanks for your reply but this is not exactly what I wanted to know. I want to see the whole thing with the ad network company's eyes.

 

[ibmjango]

see i dont know your location but here is basic thing, here 2 transaction happening
1. you are receiving income (overall income, goverment dont know that you are going to pay advertiser share here...)

2. you are paying your publisher...(see the problem you are outlining is, if publisher dont send any invoice then how you can adjust your taxes..as all income will consume in publisher payout ...right)

if i m getting your question right, that case just see one thing how you are paying your publishers...

for example if you are paying through paypal that case mass payout reciept could be use as tax document...so you can show this as expenese...so ultimately it will deduct from your gross income...

apart from this, if you are paying through checks or wire transfer, that case you can just mentioned your bank transaction details and show that under once category ..publisher payment which is expense for you not income...

your accountant can handle this very easily so dont worry about this part how he will show records but this works perfect..

hope it helps you.

 

[TheBlackHatBud]

Thank you very much ibmjango!

 

[ibmjango]

Your Welcome my friend, and i can tell you one thing, you can trust this information as this is not a guess work, i am using this practically, and this is exactly how i manage my taxes.
and there are more ways to manage your taxes but you will get best advice from your accountant as laws are different in different countries, and its his job to manage this for us, thats why we are paying them...

Thank you very much ibmjango!