Tax tips for affiliate businesses

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Spades

Spades

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Mar 19, 2007
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I saw the below comment on uberaffiliates blog covering a few tax tips for affiliates and it got me wondering/wanting more. I couldn't really find any specific sites or articles outlining ways of decreasing your tax burden as an affiliate. I'm personally struggling with this situation as the year comes to an end and I've found myself doing the obvious by purchasing new office equip, computers, phones, and all kinds of bullshit. Long term, this money could probably be more beneficial being used for purchasing new "web properties", right?

Incorporate yourself in NV, buy a ton of websites to be used as income properties, take a ton of trips to places where they have IM conferences, outsource as much as possible, put your parents on payroll and pay them, contribute the max to a SEP IRA, buy a bigger house to live in (you can write-off as much as a $1 mil in interest), buy some laptops (and give them away as gifts even though you’re claiming them for your own business expense), give every client/subscriber a $20 gift certificate (you can run a contest giving away these things and have people provide you with content or something), etc….
It’s not what you make, but what you keep! Unless you’re Donald Trump, there’s no way you should be paying a ridiculous amount in taxes. Just be sure that your taxable income stays below $250K (you can make $2 mil and still get that number under $250K) next year or Obama’s new government will tax you even more!
As with all tax-related information, consult with your tax attorney and plan a year (not quarter) ahead.
If all else fails, setup residency in the Bahamas and keep your corporation in Nevada.
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Honestly, my accountant hardly knows what kind of business I have and judging from her reactions to my figures in recent months she probably thinks I'm some sort of internet drug lord. Another issue plaguing my mind is that earlier this year instead of paying myself I left almost every penny in the business to maintain as much exponential growth possible. Maybe it would have been better to pay myself an avg salary and maintain as much growth as the remaining funds would allow.
 


Meh............

I'd rather buy low income housing, rent it out and then let depreciation work it's magic on my bottom line.

Seriously though.....I haven't paid taxes in 3 years (And my gross is around $60k).
 
Best tip I think can ever be given: Write off a trip to a good accountant as a business expense.

That'll most likely save you the most money in taxes.
 
johu said:
Best tip I think can ever be given: Write off a trip to a good accountant as a business expense.

That'll most likely save you the most money in taxes.
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Haha, that's good stuff dude.

Those are all really solid tips for tax related expenses that you can write-off. Almost anything you can think of that is "business-related" can be written off, just shoot your accountant an email and ask what he thinks..

If you're looking to take a vacation, and there's some sort of "seminar" or "workshop" in the area, that's a given!
 
On the flip side, if you live in/ move to Alaska, Florida, New Hampshire, Nevada, South Dakota, Texas, Tennessee, Washington or Wyoming- you have no state income tax.

While both Delaware and Nevada are considered the most favorable states to incorporate in:
- Nevada does not have an annual franchise tax on corporations (Delaware does);
- Legally speaking, it provides broader protection against personal liability of officers and directors than DE; and
- Nevada, unlike Delaware, does not share tax information with the IRS.
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This is going to sound strange but float money to your network or advertisers you work with. Then pay off all your cards and debts before the end of the year. If you're on a cash accounting basis and delay payments to the first of the year. Then that money is not receded in this year and the traffic is paid for. Then come the first of the year take the payment. This way you don't pay taxes on it until the following year.

As far as deductions and investments, I'll tell you the same thing my accountant told me. You can do a SEP ( retirement plan for self employed ). You can spend it. Or you can just pay taxes. Because our business is just a cash in, cash out business and there's no inventory honestly there's not much you can do. If you have high profits you may consider getting an office and hiring a few people if you have things for them to do.
 
smaxor said:
I'll tell you the same thing my accountant told me. You can do a SEP ( retirement plan for self employed ). You can spend it. Or you can just pay taxes. Because our business is just a cash in, cash out business and there's no inventory honestly there's not much you can do.
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Thanks guys, all good shit and food for thought. It seems like Smax might have hit it right on the nose, with the nature our business it's damn hard to avoid taxes if you're not spending the money.

On that note, let's hear some creative ways everyone has spent their profits...

I just bought a new pc loaded with all sorts of the latest shit I hardly have a need for, setup dual 24" monitors which I'll admit is pretty bad ass, and I've changed my mind and will be attending ASW and trying to prepay everything this year.
 
Can you really write off the purchase of a website? I thought you could only write-off the development costs & actual expenses associated with it?

If you buy a website for $10k, won't it still be worth technically $10k~ or so come tax time?
 
I'm sorta freaking out now too. I have good accountants but know I'm about to get hit hard because I haven't done anything THAT creative. Trying to figure out if there's anything big I could/should charge to the business before 12/31. Suggestions?
 
I'm in the same boat. I haven't made a lot of money by any means, but enough that I'll pay at least a few G's in taxes. I'm thinking about buying a BlackBerry but there's nothing else I can think of right now.

Maybe do TONS of testing in various niches right now to prepare to bank hard come January?

Just my .02
 
Buy an airplane... that'll soak up some taxable income.

Seriously, find a way to build tangible assets into your business (real estate, vehicles, etc.) It'll make it easier come tax time and it builds a business model that you can use to borrow real money at some point. Build a couple million in tangible assets, have a couple hundred grand open credit line at a local bank and come each November meet w/your accountant, show them your year-to-date numbers and there'll be a multitude of ways to 'adjust' your tax owed for year end.
 
Incorporate yourself in NV
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Incorporating in one state and actually being based in another will not reduce your tax liability. The state where you're based in will impose the same taxes anyway. Plus, you've increased your administrative overhead.

There can be important non-tax reasons for incorporating in another state, which is why Delaware is popular.

As far as things you can do, like others have mentioned: 1) make legit business expenses, 2) shuffle your expenses and revenues around (assuming you're using cash basis accounting), 3) contribute to a retirement plan.
 
smaxor said:
This is going to sound strange but float money to your network or advertisers you work with. Then pay off all your cards and debts before the end of the year. If you're on a cash accounting basis and delay payments to the first of the year. Then that money is not receded in this year and the traffic is paid for. Then come the first of the year take the payment. This way you don't pay taxes on it until the following year.
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that can be smart, but only if you expect to make less money next year because you now have the income (profits) without the deduction (traffic expenses) in the next fiscal year and if you plan to make more money next year, than a larger percentage of your income will be in a higher bracket and the net result is higher overall taxes.

if the reverse is true (you plan to make more money next year) than its smarter to claim all the profits you can in this year (lower overall income for this year vs next year = lower average tax percentage) and move costs from this year to next year (google postpay for example if you can). That way you can use those expenses to lower your overall higher income for which you pay the highest income tax rate.
 
also for everyone here who is smart enough to have formed a company you can write off the following

the portion of your house mortgage / rent used solely for business
all computer hardware and internet expenses (since they are used solely for business)
if you use a digital camera for AM you can write the cost of that item off as well
obviously office supplies like your sweet chair and desk
the portion of your electricity / heat bills for that part of your house
the portion of your cell phone bill which represents calls to your affiliate manager
if you actually go to an affiliate conference or drive to meet an affirlate marketer you can write off the travel expenses / miles

There are many more but these are some i think most of you have in common. I'm not an accountant, but i've had several business for a while.
 
Just get a better accountant, don't relay on half ass information from an affiliate marketing forum.
 
conv3rsion said:
also for everyone here who is smart enough to have formed a company you can write off the following

the portion of your house mortgage / rent used solely for business
all computer hardware and internet expenses (since they are used solely for business)
if you use a digital camera for AM you can write the cost of that item off as well
obviously office supplies like your sweet chair and desk
the portion of your electricity / heat bills for that part of your house
the portion of your cell phone bill which represents calls to your affiliate manager
if you actually go to an affiliate conference or drive to meet an affirlate marketer you can write off the travel expenses / miles

There are many more but these are some i think most of you have in common. I'm not an accountant, but i've had several business for a while.
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I would like to add that if anything happens to your office in your house that you be sure to not tell the insurance adjuster that you run a business outta of your house unless you have business insurance.

They will not cover ANYTHING that is used for business purposes.

Q & A:

"What are all these files for?"
"They are from work; I brought them home to work on them."

"Is that computer used for business?"
If it's your only one:
"That's my personal computer."
If it's a laptop:
"It's my work computer that I brought home."

I live in hurricane shithole and I know many of people that were fucked by this during Ike.
 
Anyone know if you really can expense the costs of buying a website (like if you buy one for $10k?).
 
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