We provide CPA services for affiliate marketers. Affiliate marketing, a performance-based marketing strategy that has grown in leaps and bounds over the past several years, offers rewards to affiliates who promote other business’s products and services and they are paid a percentage of the sale. This often creates a residual income for them as well. This means that if a subscription or a monthly membership is involved, the affiliate marketer could receive a substantial amount of revenue on an ongoing, monthly basis; or for as long as there is an active subscription for the membership that is being paid.
Although this is only a referral fee for the company that pays the affiliate marketer, it is a taxable revenue item for the person receiving the referral fee –the entrepreneur and affiliate marketer.
Regardless of whether income from performing affiliate marketing services is your core primary source of revenue or ancillary revenue, it is still earned taxable income that must be reported on your tax returns.
It’s also important is for those who perform affiliate marketing services to determine when the revenue is recognized so that it can be recorded in the proper income period. This allows us as an accountant and tax preparers to better determine when the revenue is recognized. However, there are other accounting and tax issues that the affiliate marketer needs to be concerned with as well. Seeking the assistance and guidance from a qualified CPA can provide you with the information you need to best determine which accounting period your revenue is recognized in.
As a CPA for affiliate marketers and as an accountant, we will also be able to explain the accrual versus the cash basis of accounting. Even if you are located in the San Diego area and generate an income from other parts of the country, as a San Diego Accountant and CPA for affiliate marketers, we can help you identify the tax responsibilities on a state by state basis as applicable by law – regardless of what which method of accounting, you use. Our tax preparation services have afforded us the ability to specialize in analyzing revenue earned in both the local San Diego area and abroad.
Cash versus the Accrual Basis of Accounting
Businesses that operate in the United States must use an accounting method as outlined in the IRS Publication 538, whereby you must determine when and how long you will report your income and expenses on your tax return. As tax preparers and accountants, we can help you understand the difference between each of the methods so that you can make an informed decision about which is best for your company. Two of the most common methods used include the accrual and the cash method as described in more detail below.
The Accrual Method of Accounting
The IRS states that under the accrual method of accounting, business owners must generally report both income and expenses in the year in which it occurred. So basically, the accrual accounting method would allow business owners to match their income and expenses in the proper tax year.
The Cash Method of Accounting
According to the IRS, when using the cash method of accounting, business owners (to include affiliate marketers) typically record their gross income at the time the cash is received – within the same tax year. Under the cash method, expenses are also recorded and deducted during the tax year in which they are actually paid. The cash method of accounting also has other limitations and requirements as set forth by IRS that members of our accounting and tax team can address as well.
Regardless of which method of accounting is best for you, as an affiliate marketer, you’re still responsible for properly recording and reporting income generated in the proper tax year and we can help.
Determining Costs and Expenses
As a business owner, the IRS allows you to deduct the cost and expenses that are associated with generating revenue. Our company can identify these costs and expenses and properly record them to reduce your tax liability. As trained CPAs and tax specialists for affiliate marketers, we have the knowledge needed to identify as many costs and expenses as possible that are associated with running your business to further reduce your tax liability.
Costs are classified as expenditures that are directly associated with generating an income, whereas expenses are the general and administrative expenditures (such as telephone, rent, insurance, marketing, and other expenses) that are needed to run your business.
Once costs have been deducted from revenues generated from affiliate marketing services, you will have a gross profit. This is remaining to cover your general and administrative expenses. Once those expenses are deducted, you can then report your net operating income before taxes for the year.
Our staff can assist you with this and here’s how we can help. Because as a San Diego accountant, our staff can assist local affiliate marketers to develop profit and loss statements that record your net profit or loss from your affiliate marketing business during the proper tax period. We will use this and other information to best determine your tax liability for the year.
Estimated Taxes
If you are making a taxable income and net profits on a regular basis as an affiliate marketer you’ll likely be required to file estimated taxes as well. As a San Diego CPA and accounting firm, we can assist you with estimated taxes as well as with other accounting and tax preparation services that you may be in need of.
Because we specialize in tax planning, tax preparation and assistance with both methods of accounting, we can perform an analysis of your current accounting and tax situation and offer practical financial advice to local affiliate marketers. Even if you require past due tax preparation services – a CPA or other team of experts can assist.
We are located in San Diego and our San Diego CPA and accounting firm always keep abreast of accounting and tax updates to better serve our clients.
We can also resolve past due tax preparation issues and speak to the IRS on your behalf as well.
If you are an affiliate marketer located in the San Diego area, please contact us today.
We offer the following: free consultation and allow you to speak with a CPA right away. To contact us, please complete the form and someone our firm will contact right away.