Online Writing and Taxes

Yippie! You are an online writer making money. Not so yippie is the fact you have to pay taxes on the money you are making from your online articles. Seeing freelance writers are thought of as contractors and taxes are not taken out of our pay, we must take care of this ourselves. As much as everyone hates the thought of dealing with taxes, it is a part of life that we all must deal with. These are just a few tips that can help you deal with paying taxes on your online earnings. [To get all the legalities out of the way, here is the disclaimer - I am not a tax professional or an attorney. You should always contact a tax professional or attorney for your specific questions and needs.]

• Not DIY - Taxes is not a do it yourself endeavor. Speak with a CPA or tax attorney when it comes time to deal with your taxes. Tax laws are always changing and you must stay current. One minor mistake with your taxes and it can cost you thousands of dollars. Leave your taxes to the tax professionals.

• Tax Write-Offs - Take advantage of all the tax write-offs you can. As an online writer, you are using the internet and electricity. Portions of these expenses can usually be deducted from you taxes. If you write from home, measure the amount of "office space" you use. This can usually be deducted from your taxes as well.

• Start an SEP Plan - An SEP Plan is a "Simplified Employer Pension." They are fairly easy to set up. Contributions to your SEP plan are tax deductible and usually exceed the deductions of an IRA. An SEP plan will allow you to save for your retirement.

• Miscellaneous Expenses - Remember to deduct miscellaneous expenses from your taxes. Save your receipts for paper, pens, paper clips and the like. Any additional computer programs or computer equipment you purchase to help with your online writing may also be tax deductible. Gas back and forth to the library and to pick up additional supplies may also be tax deductible.

• Health Insurance - Health insurance and other medical expenses may also be tax deductible. Chances are that as an online writer are paying for your health insurance out of your own pocket, not part of a group plan, and you should do all you can to deduct a portion of that from your taxes.

• Saving for Taxes - Online writers should should save a portion of their earnings to pay their taxes. Depending on your tax bracket, the specific percentage will vary greatly. I recommend saving 35 to 40% of all your earnings to pay taxes. That should cover federal, state and local taxes as well as Social Security and self-employment taxes. Hopefully, that percentage will be higher than your actual taxes. Saving that much money is not always easy, but it certainly isn't as hard as scrambling for the money to pay your taxes when they are due.

Online writers should also consider becoming an actual business. One of the simplest ways to do that is to become an LLC, limited-liability company. Speak with an attorney to see what would be best for you and your circumstances.

As much fun as being an online writer is and getting paid for it, you have to deal with the not-so-fun business of taxes. Speak with a tax professional or tax attorney before you make any type of decisions or try to get deductions. Tax laws vary and are constantly changing and you do not want any trouble with the IRS. It can not be stressed enough - SPEAK WITH A TAX PROFESSIONAL OR TAX ATTORNEY!

Quantity vs. Quality

It seems obvious that for an online writer to be successful, they would need to publish  often. It stands to reason that the more online articles available to readers, the more page views the writer should be able to have. That can cause lots of problems. When writing a large quantity of online articles, it is quite common for the quality of those articles to begin to slip. Just another fine line we online writers must walk. We have to get our work out there and still maintain the highest level of quality possible. Online writers can't just "throw everything against the wall" to see what sticks. We must carefully plan our work.

I'm a "quality girl." I will always believe that one well-written online article will do better than 10 poorly written articles. Unfortunately, the numbers do not support my theory. Many writers do not care if their name is associated with poor writing. They are making money off those substandard online articles and not much else matters to them. My name is my brand (that is another topic all together; for more information click here) and I don't want my readers to see me as a poor online writer.

Truth be told, most readers do not notice the "little mistakes" that online writers make. Because of the informal style of most online writing, the rules of grammar can be bent some. (I think that actually physically hurt me to admit.) Of course, the "screaming mistakes" do get noticed. What is the difference in little mistakes and screaming mistakes? Not a clue; they all scream to me.

Will mistakes, of any kind, drive your readers away? Depends on the specific reader. Some do not mind. Others will be reading something else as soon as they spot the first mistake. It also depends on the type of online writing you are doing. When you are coming across as an expert in a specific area, mistakes will not help you appear to be an expert. If your are writing a "fun read," mistakes may not matter that much. (I felt another pain.)

So, which do you worry the most about - quantity or quality? Both. You must produce the highest quantity of articles that are of the highest quality. The fewer mistakes the better. Of course, all the information must be accurate. For me, it isn't worth the chance. I'd rather write few online articles than to have a reader refuse to read my work because of my mistakes.

How Online Writers Make Money

I receive emails from online writers on a weekly basis, asking how they (we) make money. It can be confusing with so many writing sites and blogs available to writers. These are just some of the ways writers make money writing online:

• Upfront Payments - Some writing sites offer their writers "upfront money" for their work. These payments start at just a few dollars and can go well over $200.

• Traffic Revenue -Other writing sites offer "traffic revenue." This is when the online writer is paid for the number of page views their work gets. Sometimes the page views are limited to "unique visitors," meaning if the same IP address visits the article more than once, the writer is only paid for the first visit.

• Ad Revenue -Many writing sites offer "ad revenue." The writer is only paid if the reader clicks on an ad on their work. Sometimes the reader has to perform an "action" such as signing up for something or agreeing to get more information about the subject of the ad. The sites use an "Albert Einstein-type" mathematical equation to figure out exactly how the writer is paid.

• Ad/Traffic Revenue -Writing sites also offer "ad/traffic revenue." Writers are paid for both "clicked ads" and page views. Another "Albert Einstein-type" equation is used to figure out the payments.

• Affiliate Programs -A few writing sites allows the writer to add links to products the affiliate program have for sale. Amazon is just one of the many affiliate programs writers can use.  Affiliate programs will pay the writer a percentage of the sales price for the items that are purchased through their links.

Writers who have their own blogs or websites only receive ad revenue unless they are members of an affiliate program. They do not receive traffic revenue for the page views they have.

When the goal of online writing is to make money (no matter the way they make that money), writers must come up with ways to increase their traffic. Without traffic, it doesn't matter if you have the best paying ads or the most popular affiliate program products; no one will see them. You must drive traffic to you online writing sites. The more traffic you have, the more page views you are paid for and the more likely it will be be that your readers will click on the ads or purchase your affiliate program products. That is another can of worms to be addressed at a later date.