Tax deductions for affiliate marketers

tax deductions and expenses for affiliate marketing online

Let me start off by saying I absolutely suck at keeping up with paperwork.

You either love it or you don’t. I absolutely hate it.

I have always attempted to seek ways to reduce my workload by automating everything I do as much as i can. Earlier in my career I decided to import a physical niche product that I started to sell online. It started to make me some money but honestly I could not be bothered to process orders, print envelopes, pack the goods, make my way to the post office and to ship the products. It got so bad that I would rather give customers a refund than put the effort in to ship them (yes I know ridiculous LOL). I used to joke around with my sister about this. Her online businesses are all about customer service and shipping products and I could never be as organised the way she is. Quite often I would say to her ‘Yes dear. That’s great for you. But it’s not who I am. I just want to go to sleep, wake up, check my email and see how much money I made’. And that’s exactly what I did.

Anywho I’ve gone off topic a little but I had a point to make. If you are anything like me then you will need all the help you can to keep yourself organised especially when it comes to your tax records and expense management whether you are into affiliate marketing, internet marketing or whatever you want to call it.

Managing your receipts

FACT: Keeping good records of your receipts will allow you to minimise your tax liability to the government.

The moment you start to scale up your operations and outsource everything you are going to find it difficult to manage your expenses if you don’t plan ahead.

I scoured the internet high and low for the simplest solution I could find. If you are as lazy as i am then you should check out Shoeboxed. Shoeboxed allows you to forward receipts via email, take a snapshot of them with your phone or even mail them in via snail mail. The beauty of shoeboxed is that a team of administrative staff will go through your receipts and properly categorise it for you. This means at tax time you have meticulous records of your expenses which will allow you to minimise your tax and maximise the amount of money you can keep in the end.

Shoeboxed is not only a timesaver it is literally a lifesaver. For around $200 a year you will outsource the most time consuming aspect of your business. You will thank me later on this one!

Minimising your tax and Maximising your deductions as an affiliate marketer

Once you start to make serious money online you will need to start thinking about how you can keep as much of that hard earned affiliate money as possible. Again, this is a step you want to think of right at the start. Leaving this at the end can see you hand over a large proportion of your hard earned money to the government all because you did not spend an hour or so coming up with ways to help yourself. This is especially important if you have a full time job as a second income for most will push you into a higher tax bracket.

So, how can you minimise your tax? Spend appropriately throughout the year of course and keep records of it through shoeboxed.

Examples of Tax deductions of Online affiliate marketers

– Cost of internet
– Cost of mobile phone monthly fee with your carrier (even though you may not be using the telephone aspect you are most certainly using data to receive work emails)
– Hardware purchases (computer equipment, new mobile handset, speakers, hard drives, USB devices, NAS storage devices, you name… as long as you use it in your day to day business then you can claim it)
– Advertising (this could be SEO, Adwords costs, etc)
– Online costs (these could be as simple as subscribing to Akismet Spam or web hosting, cost of buying domains, freelancer costs, software purchases, VPS subscriptions, subscriptions to tools that help you in your SEO efforts, etc, etc).
– Travelling costs (Airfares to exhibitions, conventions, training sessions or perhaps you own a travel website and you review destinations… well you might be able to claim the cost of travel too!)
– Home office costs (stationary, a percentage of utility bills, cleaning costs, etc, etc).

The list is virtually endless. If you can substantiate that your expense was a requirement in doing business then you will most certainly be able to claim it. Naturally the rules differ in each country but most Western world countries apply similar principles.

Accountants for affiliate marketers

I am yet to find one that specialises in this area. It’s such a shame though. You would think that SEO savvy accountants would have recognised this as a niche to providing a service for affiliate marketers like us.

I suppose the point I want to make is that you can probably do your own tax returns but keep in mind that you are not likely to get the best possible outcome. Accountants do this for a living and they know all the rules and methods to maximise your return (or lower your tax liability) so it’s in your best interests to find one that can help you meet those goals.

If you are starting to make serious coin from your online affiliate marketing then you also need to be prepared to pay tax. As much as none of us like it, unfortunately it’s a reality for most. Don’t do anything silly in your tax return that could potentially have your entire financial history under a microscope. Be honest with Mr tax man because it will come back to bite you later on.

Apologies for the draft post. It’s not picture perfect but I hope that it answers some of your questions. Ask away if you are unsure. Even if you take away nothing from this post just remember that a receipt management tool will be your saviour at tax time!

About George Aleksander

Social media is my first true love. I have a passion for online marketing and everything else in between. I like to share my knowledge regularly so please come back often. If you want to provide any feedback or new ideas then I would love to hear from you. Just add your comments below.

2 thoughts on “Tax deductions for affiliate marketers

  1. Hey George! Great read. I know it is a year late but I am a CPA specifically focusing on affiliate marketers and online based businesses such as FBA etc. Great start. Definitely the most difficult part for tax purposes is identifying costs that are relatable to the business. GOverall good stuff and you have hit on the basic allocable deductions. Feel free to email me if you ever have any questions or are looking for someone who specializes in this area!

    Austin

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