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View Full Version : READ ME: What is your pre-tax net?


Steve_S
07-23-2001, 06:57 PM
Let’s see how this works out. I’m hoping it can lead to some quality discussions. Your “vote” is 100% anonymous. I am reluctant to mention this but please be honest when you select your answer and only vote once. :nonono: :)

Translations:
2 digits: $10.00
3 digits: $100.00
4 digits: $1000.00
5 digits: $10000.00
6 digits: $100000.00

Definitions (edit of 7/25/01):
"What is your pre-tax net profit for calendar year 2001?"

1) Calendar year 2001 begins on 1/1/01 and runs through the current day. It's not the last 365 days or the last year. It's sometimes refered to as "year to date"

2) "pre-tax net profit" for the purposes of this poll and a ballpark definition for self employed folks is :

I cashed checks for $12,000.00 for CPA, CPM, and CPC campaigns for period 1/1/01 through today. Thats your gross and NOT your net. It's never your NET as all business have exspenses.

3) I spent a total of $7,000.00 for the period 1/1/01 through the current day for EXSPENSES like hosting, advertising, custom coding work, rent, graphic artists fees.

4) My "...pre-tax net profit for calendar year 2001" is NOT $12,000.00. My pre-tax net is:

12k minus 7k = 5K

5) Salaried GEEKS of which we have plenty get a "pay stub" which showes gross earnings and net.

Please post in this thread if anything in the Poll is not clear or you don’t understand it. Good luck :)

fatale
07-23-2001, 07:54 PM
We probably won't see many votes below "I break even". Not because majority of webmasters are actually making money, but because most of us don't have the money to be able to survive for long with significant negative cash flow. :(

PWR_Paul_Banker
07-23-2001, 10:15 PM
Oh please gimme a break.

15% of you make 6 digits? We are not counting to the hundreths place guys ;) 6 digits is to the LEFT of the decimal :rolleyes:

If you honestly make over $100k/year yikes, whats your site!

JonPKibble
07-23-2001, 10:46 PM
I voted 5 digits, but this does not include advertising expenses - I reinvest pretty much all my profits minus personal expenses, into getting new subscribers/visitors.

clay
07-23-2001, 10:53 PM
I voted 5 digits, but I'm on a salary.

demae
07-24-2001, 12:27 AM
Hmm, is this poll meant for people who run websites for a living as opposed to people who are on salaries?

Jan
07-24-2001, 01:10 AM
Just as a matter of interest to 'overseas' affiliates, if you are earning big money, do you have to declare it?

At present the Australian Tax Office doesn't know about my earnings from the net. I don't even know if we have to tell them.

Czar maybe you know???

Supermoo
07-24-2001, 01:27 AM
I think you do Jan, and when you cash your cheques into your Australian Bank account the ATO can monitor your funds. I imagine you will have to pay tax on this eventually. :(

demae
07-24-2001, 01:31 AM
Maybe you can hide it in a Swiss bank account or something, if the Australian government doesn't require you to declare offshore investments (I think the US government does).

Jan
07-24-2001, 01:41 AM
Uhoh! better get me a real job so I can pay the taxes :eek:

woutah
07-24-2001, 02:27 AM
Don't worry Jan, they are pretty much clueless when it comes to earnings from the internet in most countries overseas.

I live in Belgium and tried to declare taxes. It took me 4 letters before they understood why I was paying taxes for.
They even told me that if I wouldn't have mentionned it, they would never have found out about it.

The fact is, in most countries, the fisc can't just monitor your bank account. They need a good reason for it (fe: fraud, money laundring,..). The only way they could find out about your earnings is through the IRS, but there doesn't seem to be much communication between the IRs and foreign tax offices..

Czar
07-24-2001, 03:58 AM
Originally posted by Jan
Just as a matter of interest to 'overseas' affiliates, if you are earning big money, do you have to declare it?

At present the Australian Tax Office doesn't know about my earnings from the net. I don't even know if we have to tell them.

Czar maybe you know???

Earnings from the net have to be declared, just as any other earnings would be. For want of a better term, most of us are classified as 'exporters', since the majority of our online revenues come from overseas, and just like exporters of products, we are required to pay taxes on our earnings (while receiving deductions on business-related expenses).

Personally, the only benefit that I get from dealing mainly with US-based firms is that filing my company's BAS each quarter is a piece of pie, since no GST is payable or receivable on such transactions. I certainly receive no out-of-the-ordinary tax breaks, though. Pity. ;)

In order to learn more about how your online earnings affect your tax reporting, have a conversation with your accountant. It's always better to be safe than sorry.

Jan
07-24-2001, 04:21 AM
Ouch!

Well my earnings weren't that big that I could afford an accountant, but I did have a good time last year. Guess I better get a tax agent for last years return :-(

Thanks guys

:crying:

Czar
07-24-2001, 04:51 AM
Well, without delving into anyone's personal finances in too much detail, those adult Australians whose annual taxable income is less than $6000 (this includes all earnings, not just your net stuff) do not have to file a tax return. This figure is $643 for teens.

If you are earning more than this, you may still be able to manage your own taxes without too much trouble, but a tax agent/accountant can save you a great deal of effort, and fill in the blanks, so it is a good idea to meet with one.

Just make sure you keep good books...or have an shoebox handy! :D

This is one of the more painful aspects of working for yourself - but it's well worth the trouble in the long-term.

Lil_Red
07-24-2001, 06:59 AM
If Quickbooks or a similar accounting page is available, invest in it. It can save an incredible number of headaches and it simplifies record keeping.

Jan
07-24-2001, 07:25 AM
Oh boy! All those nice 'overseas negotition' forms from the bank got thrown out when I was sure the money was mine :(

I didn't keep good books and I don't have a shoe box. I really didn't think I would need them. I still have MYOB though from school, but none of my stuff in it!

Oh Boy!

I will take your advice from this day on!! Can I swear????

I just did, but you didn't hear it I hope :p

Czar
07-24-2001, 08:11 AM
You'll be right. Just work from your bank statements.

In terms of tax reporting, the source of your payments isn't hugely important, since no Group Certificates or anything like that are issued from foreign firms. All that is important is how much you earned, what expenses were involved in the running of your business, and whether there was a GST component associated (most often there won't be).

If you don't have your bank statements on hand, you should be able to retrieve this info, or order past statements through your online banking service.

Hope this helps, and best of luck.

Strider
07-24-2001, 11:03 AM
Oh please gimme a break.

15% of you make 6 digits? We are not counting to the hundreths place guys 6 digits is to the LEFT of the decimal

If you honestly make over $100k/year yikes, whats your site!

Not everyone who is an online professional makes their money through content sites. I don't see why those figures are hard to believe when you look at the quality of the sites, products and services that are sold by the members of this forum.

Steve_S
07-24-2001, 03:46 PM
This may be of interest to you:

In the last 24 hours 141 unique members have visited geek/talk. This is tracked via the member session cookie which is very persistent. Only members in good standing can vote.

Any final conslusions may be premature given that just 75 folks have voted as of this post. Thats a bit higher than what I expsected but this is really unchartered water. Thanks for all of you who chose to participate.

The mecahnics and procedures are already under discussion at:

http://66.33.83.213/forums/showthread.php?s=&threadid=11656

Thats the thread to use for these types of issues..

If I were to draw conclusions from our 75 votes it would be:

The majority of members can afford to pay $9.95 per month to use geek/talk </joke> :)

Seriously, I hope and pray everyone takes these Polls seriously and gives honest answers and only votes once. Natch, all Polls have a "fudge factor" or what some call an error factor.

The geek/talk member demographic is significantly different than the average run of the mill BB. Each Community has their own way of doing this so I'm respectfull of other methods and the fine Boards that do this. We do have Merchants who I presume voted as well as Corporate types. Thats one of our unique strengths :) Lets wait and see. This is our first real Poll in this Forum so it might take us some time to fine tune the procedure.

AND, speaking of Polls :) please take a minute and vote in our Speed Poll at:

http://66.33.83.213/forums/showthread.php?s=&threadid=142

Thanks and good luck.

xuniverse
07-24-2001, 03:58 PM
i just went thru my little box-o-receipts and tallied that i made $14921.43 in profits in the last 365 days. Im very proud of myself :) even tho many of ya'll make 10X that... The only sad part is that i dont really think ill ever make that much again in a year from the web........... WELL MAYBE! Im soon to launch a new really tight program called skinbot... Ill be sure to show you all this program before i launch it. Its a new exciting thing that allows you to have skins on your browser (without the gross ad bar that hotbar makes you have).

Again, as I posted months ago.... I feeeeeeeel SOOO lucky that i, joe shmo, was able to find out about the net while you could still make money relativily easily. I feel sorta sad for the other million's of american teens who werent as fortunate.

PEACE.

Vrindavan
07-24-2001, 07:32 PM
I think there is a market for
tax reporting/personal finance guide to affiliates.

One for affiliate in each country.
e.g. guide for US affiliate, AUS affiliate,UK affiliate, etc

JP Sauve
07-24-2001, 08:28 PM
xuniverse, $15K for a student is not a bad wage. You should be proud of yourself that you accomplished what many could not.

govinda, a tax tips website for webmasters is a great idea! I know if there was one for Canadians, I'd check it out and would probably spend some cash for an ebook on the subject.

xuniverse
07-24-2001, 09:35 PM
thanx..... but i lost about 2 friends for that $15000.... I turned down alot of oppurtunities to go do fun things cuz I wanted to work on building sites... BUT ITS ALL GOOD NOW... Im back and very happy... so i would do it again.

Nintendo
07-25-2001, 12:32 AM
I voted five digets. Before taxes and costs I'll make between $15,000-$20,000 this year, vs around $100,000 last year that was all from content sites.

This year, besides content sites, I'm making $$$ from selling stuff through amazon.com and making ebay.com leads.

::We probably won't see many votes below "I break even".

Right now it looks like 90% did better then breaking even!!!!!

Steve_S
07-25-2001, 02:00 AM
:bonk: I have introduced some confusion in this poll because I assumed we all know what the terms mean. So, after reading a few posts in this thread let me explain and please accept my appolagies.

The original question which has never been changed or been edited:

"What is your pre-tax net profit for calendar year 2001?"

1) Calendar year 2001 begins on 1/1/01 and runs through the current day.

It's NOT the last 365 days or the last year. It's sometimes refered to as "year to date"

2) "pre-tax net profit" for the purposes of this poll is and a ballpark definition for self employed folks is :

I cashed checks for $12,000.00 for CPA, CPM, and CPC campaigns for period 1/1/01 through today. Thats your gross and NOT your net. It's never your NET as all business have exspenses.

3) I spent a total of $7,000.00 for the period 1/1/01 through the current day for EXSPENSES like hosting, advertising, custom coding work, rent, graphic artists fees.

4) My "...pre-tax net profit for calendar year 2001" is NOT $12,000.00. My pre-tax net is:

12k minus 7k = 5K

5) Salaried GEEKS of which we have plenty get a "pay stub" which showes gross earnings and net.

:bonk: Again, my appolagies.

You can exspect the Forum below this one named Business Principles to open very very soon :)

Jan
07-25-2001, 04:59 AM
Still doesn't change my vote

:rolleyes:

wileyp
07-25-2001, 07:38 AM
quote:
--------------------------------------------------------------------------------
Originally posted by Jan
Just as a matter of interest to 'overseas' affiliates, if you are earning big money, do you have to declare it?

At present the Australian Tax Office doesn't know about my earnings from the net. I don't even know if we have to tell them.

Czar maybe you know???
--------------------------------------------------------------------------------

Jan

not only do you have to pay tax on your earnings you also have to pay GST on your affiliate commissions if it's an Australian who purchases the product you receive commission on.

A few months ago the Aussie tax office got their lawyers in Canberra to make a private ruling on my overseas affiliate earnings.

And what they came up with was:

Their letter is full of official gobbledegook, but it seems to say that we have to pay GST on our affiliate commissions whenever an aussie resident buys a product.


"It is considered that you are making a supply of your services as a promotional agent to the various vendors who pay you an "affiliate" commission. The commission you receive is consideration for this supply."


............


"when there is no relation ( to Australia ) to the acquisition of your promotional services, you may offer that supply GST free."


.................


"When you receive an affiliate commission from an Australian entity the commission will be subject to GST. In practice for you it will most likely be impractical to request that you be paid an additional 10% to cover this GST liability.


"The cost of GST payable on such commissions is 1/11 of the consideration received."
____________________________


In practical terms we often don't know whether the person buying the product is an aussie or not but it seems we have to try and find out.

Phil Wiley
http://www.minisiteprofits.com

gallery
07-25-2001, 07:49 AM
Woutah,

what happened ? Have you declared your earnings ?

I'm also from Belgium, and wanted to declare my revenue.

They did not even think it was possible to earn money from the net. They laughed at me and told me to not declare anything.

They do not even know what the internet is all about (even my parents do not know).

Jan
07-25-2001, 07:54 AM
Holy wow!!

How on earth can we say who clicked on banners or used mailbits??? I would say maybe 70% were from USA but the rest were from ALL over the world!!

I didn't sell anything myself apart from advertising for the banner companies.

How did you handle that with the ATO?

wileyp
07-25-2001, 08:08 AM
Well I haven't handled anything with the ATO yet. But I'm worried about it.

I've been making my money by writing about affiliate programs in my weekly newsletter, plus running a number of mini sites. Most readers are from the US, and I'd guess around 3-6% are Aussies. Sometimes I can tell if an Aussie buys from me - when the affiliate program is run through Clickbank, for instance, it shows the country of the buyer, but usually I can't tell.

But things are going to get more complicated. I've just released my first book, about building mini sites, and I'm about to launch my own affiliate program.

I'm half thinking of leaving the country.

Phil

Czar
07-25-2001, 08:48 AM
"When you receive an affiliate commission from an Australian entity the commission will be subject to GST. In practice for you it will most likely be impractical to request that you be paid an additional 10% to cover this GST liability.


"The cost of GST payable on such commissions is 1/11 of the consideration received."

Phil and Jan, the above doesn't mean that you need to pay GST where an Australian consumer purchased a product through one of your affiliate links. Rather, it means that where the affiliate program itself is managed by an Australian entity (such as Engage Australia, DStore or WishList), from whom you collect GST as part of your earnings, you must take account of this when filing your BAS (presuming that you are registered for GST). You can't pay GST to the ATO unless you've collected it first, after all.

When managing your own affiliate program, things will become more complicated (that's where Phil's nightmare scenario comes into play). While you're operating through a third-party who handles all of the transactions, and sends you a commission check, you are not providing a supply direct to the Aussie consumer, and thus are not liable to pay GST for that.

alexk
07-25-2001, 10:45 AM
Originally posted by gallery
Woutah,

what happened ? Have you declared your earnings ?

I'm also from Belgium, and wanted to declare my revenue.

They did not even think it was possible to earn money from the net. They laughed at me and told me to not declare anything.

They do not even know what the internet is all about (even my parents do not know). verry interesting... :crazy: i was going to pay taxes for the year 2001 but after reading your and Woutah's posts I probably won't do... :p

btw, do you know what is the fine (or whatever) for not paying taxes in Belgium?

demae
07-25-2001, 04:28 PM
I'm curious: Has anyone here purposely moved to a foreign country with lower taxes/costs of living, while earning a relatively large income from the internet?

gallery
07-26-2001, 02:54 AM
Hi Alexk,

I see that there are a few people from Belgium in this forum :p

I've a day job too so I pay taxes (a lot :mad: )

The problem in Belgium (and maybe in other countries) is that all the people I have asked how to declare my internet earnings are completely useless (and that's their job !!)

Also, let's imagine that you have been able to declare your internet earnings.

How are they going to check that you have declared the right amount ? That's nearly impossible and I think they will be constantly after you.

alexk
07-26-2001, 04:03 AM
I've a day job too so I pay taxes (a lot :mad: ) so do I, and it's 10-20 times more than I'm having from the internet... the 40% tax we have in Belgium is just way too much imo :mad:

AhmedF
07-26-2001, 06:16 AM
A bit off topic.

Wouldnt it be losing, not loosing? =0

JP Sauve
07-26-2001, 06:58 AM
Originally posted by demae
I'm curious: Has anyone here purposely moved to a foreign country with lower taxes/costs of living, while earning a relatively large income from the internet?


Not me, but like many people I dream of moving to a tax free country. I hear the Cayman Islands is tax free, but I don't know anything about it.

AhmedF
07-26-2001, 08:08 AM
Saudi Arabia is tax free.

Getting in is the problem ;)

Vrindavan
07-28-2001, 06:58 PM
Can some Aus Webmasters let me know
if they have to report income source
earned outside Australia by law? e.g.
US Affiliate program income.

If you like, you can
reply to me @
vrindavan@onebox.com

Some countries do not tax citizen income derived
from foreign sources.
I do not have a list of such countries.

And I think many countries now
adopt international taxation,
no matter where the income derived from.

Czar
07-29-2001, 12:38 AM
Can some Aus Webmasters let me know
if they have to report income source
earned outside Australia by law? e.g.
US Affiliate program income.
Yes, we do. You'll find some additional tips/thoughts about this earlier in the thread. (the most important being the need to consult with a tax agent or accountant regarding your particular circumstance)

jemma
07-29-2001, 08:51 AM
:confused: I'm a little confused about what to add or subtract when I vote. We received a lump-sum payment this year for several months of last year's earnings. Because it was paid to us in this calendar year, the IRS considers it this years earnings. This would place me into net 4 figures.

If I exclude it, it places me around net $400-500. Our earnings are very seasonal though, so ordinarily there'd be reason for optimism. :) The holiday cards get a lot of traffic at end of the year, and the site has always done really well from October on.

Unfortunately, I no longer have any precisely targeted ads, so a big increase in traffic may no longer translate into a big increase in earnings. Also, things are not looking too good for my CJ account - my CJ ads seem to have gone into hibernation - hardly a peep of profit out of any of them. :(


Jemma

consent
07-30-2001, 05:57 PM
I'd like to see another poll regarding (non-salaried) content sites only. Also, it would be nice if it were impossible for anyone to vote twice.

For those making almost $200,000 (projected) for 2001...please mention more details.

ref
07-31-2001, 01:04 AM
jemma:

The rule is simple you deduct all you expenses that make sense to an accountant.

That include the depreciations of you computer(s) [three years in Canada], of you chair [you sit on it] everything that you consume [paper, glasses that you break when the server goes gown, lost of light because you work in basement, neighbour syndrome – you can not concentrate when they cut the grass and so on]. You will get something that will allow you a free tree on Christmas, some canned soup and everybody understanding. Somebody be with you.

jemma
08-01-2001, 07:52 AM
ref wrote: [deduct]neighbour syndrome – you can not concentrate when they cut the grass and so on...

:) Now there's a deduction that could save me lots of money! I have neighbors who often disturb my work and tranquility (living in NYC also destroys my tranquility, but that's another story ;))

trabaho
08-09-2001, 02:34 PM
Having low exchange rates make it worth while earning in dollars in south east Asia. I've made a lot but since I've moved back to Australia had to pay up a little, okay a lot!!