If you make money online whether it’s being a blogger, webmaster, online entrepreneur or whatever, today is the last day to file your taxes for the past year!

Honestly, I’m hoping you guys have already filed your taxes instead of waiting for the last day. So, let’s assume you guys already did but got a headache running around trying to scramble to do so; let’s go over a few points for next year so you guys are a little more prepared for it.

Document Everything!

Personally, I didn’t do a great job in documenting for this past year so don’t be like me. The main thing I didn’t keep track of like I should have were the expenses I could have deducted. And this means keeping receipts, tracking them on spreadsheets, keeping them all organized in a folder, etc.

I wrote a post on “Tax Deductible Expenses for Self-Employed Online Entrepreneur” a little while ago that should help. But essentially, anything and everything you think could be deducted, more than likely it can.

So, keep track, save receipts and pay less on your taxes!

Keeping track of the income coming in was a little easier because I usually get paid two ways: through Paypal or via check in the mail. Once I officially get paid, I save the paystubs for the checks and I document how much I got paid on a spreadsheet.

Don’t Wait Until the Last Minute!

When I say “don’t wait until the last minute” waiting until the last month to get all your stuff ready is just about the same thing.

Each month you should essentially keep track of your income and expenses and a simple spreadsheet and foldder could do wonders for you. This way when you do taxes next year, you’re not running around scrambling once again making sure you didn’t miss something. You should have everything ready from the get go.

And yes, I was one of the many who was scrambling around making sure I had everything all set.

Be As Accurate As You Possibly Can or You Might Be Audited

You want to file your taxes to the best of your ability because if you don’t report everything, there is a chance you’ll be audited. And no, that’s not a good thing when you are being audited for money issues.

Now, it’s hard being completely accurate when you scramble at the last minute but you want to report as much as you possibly can. I heard if you report your income and next year you happen to pull in like 10 times more than the previous year, then that might throw up a red flag.

Although, that is extremely possible in some cases, you want to be safe and have everything ready. Some people tell me they track back up to 10 years when doing audits. So, if you’ve been doing this online entrepreneur stuff to make money online for the last five years, make sure you have all your taxes intact for the last five years.

Put Money Aside to Pay Taxes

If working for yourself is the only income you have, make sure you put enough money aside to actually pay for the taxes you owe. Every area is different so I’m not sure how it is but generally I would save up to 35 percent.

For instance, if you made $10,000 last year, make sure you save $3,500 because that’s what you would be potentially paying back in taxes.

Tip: What I would do is create a savings account (there are plenty of online savings account like ingdirect) and each time you make a transaction, calculate 35 percent of that and just deposit it into your savings. This way you’ll be making money in interest while you save to pay back in taxes.

Luckily for me, I also have a day job so instead of paying back taxes out of my own pockets, they basically took it out on what was owed to me from my day job.

Conclusion

Don’t wait for the last minute and try to be prepared. Working for yourself has its benefits but it is also hard work as well.

Also, if you guys file for taxes in different countries outside of the states, please let me know. I’m a bit curious and I’d like to compare.

Any questions? Feel free to ask!