Taxes on affiliate income?

[hyacinthgirl]

If anyone has any tips on how to report this stuff, I would really appreciate it. I'm assuming I will be filing as a business with my father as a joint owner, and am hoping I can put some of my advertising, hosting and such down as deductions.

ANY information would be appreciated, as I am completely, completely clueless.

[ResIpsa]

First - I am assuming you are US, if not disregard this post completely.

Secondly - I'll just give a quick overview, but you really should consult a professional.

When you say "joint owner" that automatically means a partnership unless you have formed a corporate entity (a c-corp, which is unlikely, or an S-Corp). If you formed an LLC, this is only a state law entity and is treated as a partnership for Fed. Tax purposes. If you're an s-corp or partnership you file a similar entity level return; the form is different for the two entities but the substance is the same, so I will just focus on the partnership return. When you file a partnership return it is an entity level informational return, i.e. you do not pay any taxes on this return (all income flows through to the individual owners who pay taxes on their individual returns). On this informational return (Form 1065), you will enter all income and expenses (hosting, advertising, or any other "general business expense"), there a number of categories listed on the return for you to break this down and you can attach a schedule to break it down further (the more detail you provide the easier it is to substantiate). If you don't use a professional tax preparer, I would suggest using TaxCut or TurboTax business edition, which will walk you through the partnership forms. Once you complete the partnership return, you will create schedule K-1's that will go out to all of the partners which will show their allotted portion of each item of partnership income or expense, which they will then report on their own return.

Not sure if that is what you are looking for...but I hope it helps somewhat. The bottom line is you really should talk with an accountant or tax professional.

[hyacinthgirl]

that does help quite a bit, actually.
my dad talked me into buying quicken to keep records, but i think it's pretty useless for what i'm trying to do. any tips on record-keeping? it's certainly not my forte.

[Zilla]

Just a simple spreadsheet should be good enough to keep track of your income and expenditure.

I would guess that most affiliates have no more than 10-30 sources of income each month, and maybe the same in items of expenses.

I'm an accountant so it's pretty second nature to me - but I doubt you would need an accounts software package like Quicken unless you have huge amounts of transactions.

[ResIpsa]

Originally Posted by hyacinthgirl

that does help quite a bit, actually.
my dad talked me into buying quicken to keep records, but i think it's pretty useless for what i'm trying to do. any tips on record-keeping? it's certainly not my forte.

I would recommend using Quicken or Quickbooks and just being diligent to make sure you get everything in there. Everything should be entered in there on a regular basis, don't let it pile up on you or you will forget things and make mistakes. Keep in mind if your expenses are on a credit card (or out of a bank account) you can usually download them into quicken with minimal effort.

The biggest issue is making sure you keep track of everything, you can go through it later (preferably category by category) to modify it as needed for tax time to account for special rules (e.g., meals and entertainment expenses during business meetings can only be deducted at 50%)

[ResIpsa]

Originally Posted by Zilla

Just a simple spreadsheet should be good enough to keep track of your income and expenditure.

While I agree in principle (Quicken really is nothing more then a good spreadsheet template), my guess is that anyone that is asking about it probably isn't that good with spreadsheets and would probably benefit from the hand holding that Quicken provides.

[hyacinthgirl]

so far even the "hand holding" quicken has isn't good enough... the program seems useless and confusing to me. i'm starting to wish i'd actually done my spreadsheets on my own in college instead of copying my roommate's disk.

in all seriousness, i'm not stupid or something, but quicken doesn't seem to work for what i want to do at all. do i need to get separate bank accounts for this and another credit card?

i guess i will have to find an accountant, booooo. i suppose it's better that my dad is making me be all legalish about this, but it seems like a hassle.

[ResIpsa]

Originally Posted by hyacinthgirl

so far even the "hand holding" quicken has isn't good enough... the program seems useless and confusing to me. i'm starting to wish i'd actually done my spreadsheets on my own in college instead of copying my roommate's disk.

in all seriousness, i'm not stupid or something, but quicken doesn't seem to work for what i want to do at all. do i need to get separate bank accounts for this and another credit card?

i guess i will have to find an accountant, booooo. i suppose it's better that my dad is making me be all legalish about this, but it seems like a hassle.

Hope I didn't come across as insulting with the "hand holding" comment, I didn't mean it that way...simply that if you are familiar with Excel its probably all you need but a lot of people aren't that familiar with it...

As for Quicken...keep in mind you don't need a lot of the advanced features so you really should be able to keep it fairly straightforward. You do need to set up separate accounts in quicken for each bank account, credit card account (and probably also for neteller and/or paypal). Go through the tutorial on it and it should give you a good introduction on how to use it to track income and expenses.

Sorry I can't be much more help, but sounds like you may just need to sit down with someone that will go through it with you and get you all set up

[hyacinthgirl]

i didn't think it was insulting

i will check the quicken out again, i may have been in the wrong section, who knows.