Running an Online Marketing Company? Here’s Our Guide on All Tax Issues
The alternatives for online business have significantly increased over the last years, thanks to how easy it has become to offer services and products without an exuberant kickstarting investment. Many small companies have started with reduced teams and reached essential milestones, thanks to the available resources to aid them every step of the way.
With online marketing companies, clients can reach out to make a business from anywhere around the globe to ask for quotes and work alongside you. This may cause some confusion when it’s time to file taxes at the end of the fiscal year, and it’s always best to play safe when it comes to having your bookkeeping balances as impeccable as possible. If you’re running an online marketing guide, we want to share our guide on all tax issues to shed light on some of the most common worries you might encounter on the way.
Consider your Business Entity
Some business owners are the sole proprietaries, and this will change the way they need to file taxes. Others have formed their companies as fully-fledged, separate entities that have different tax requirements. It’s important to understand the business entity you’ve chosen for your online marketing company and learn the forms you need to fill for your taxes. If you work with hired employers, you also need to consider their tax claims with each pay stub. However, some companies rely on freelancers since they’re considered self-employed for tax purposes, and you do not need to consider them in your declaration at the cost of having them working as a detached entity from your company.
Look into Federal and State Taxes
When it comes to filing taxes, you will need to consider your company’s physical location to know the exact taxes that apply to your business. There are only seven states in the U.S. that don’t collect state income tax, so that’s a basic floor you have to consider alongside sales tax depending on whether you have sufficient presence in the state. Being an online marketing company means that you’ll need to pay taxes in more than one state at once, but the overall sum will be lower compared to the amount you would have to pay if you had a singular physical location with local clients. Throughout the year, you will also have to keep an eye on paying your employee’s taxes with every payroll as well.
Use Accounting Software to Keep Track of Finances
While most companies may only rely on basic tools to keep track of any relevant financial documents, at some point, you will need to upgrade your digital solution to a fully-fledged accounting software. This will allow you to have a full record of receipts, pay stubs, and other relevant documentation that will come in handy when filing taxes. It’s important to note that failure to pay taxes on time means that you’ll get charged interest on penalties for every year that you miss the pending payment. However, as explained here, there are specific cases where you can waive their penalties if you’ve suffered major disturbances or events that justify your late payment. In any case, most companies rely on efficient digital solutions with great results and their bookkeeping efforts are reduced to small tasks performed on a weekly basis rather than wait until the end of the month to do an extensive checkup.
Learn about Potential Deductibles
The best way to save money while paying taxes is to know the specific company expenses that can be written off as deductibles. If you have a physical office, for instance, renting and utility bills are the most common expenses that you can deduct off your tax declaration, alongside business-related insurances. However, for any online company, all operating costs are perfect candidates to add to the list. For instance, anything related to advertising and marketing your company’s services can be considered as necessary expenses. It can help you decrease the total amount of taxes you need to pay by the end of the fiscal year. Depending on your brand’s size, these deductions can help immensely to keep costs low enough to reinvest profits back into operations.
If you have enough information and knowledge to understand how to deal with your online marketing company’s tax claims, you should rest assured that everything should go according to plan. Even if you don’t feel confident with your bookkeeping or accounting skills, you can always rely on outsourced labor to ensure you don’t miss out on any relevant detail and keep your business running smoothly no matter the circumstances.