Earnings UP - Life Without PayPal Is Good
Last month I posted about how sometimes being a webmaster sucks - I complained about Adsense earnings being down, getting banned from Paypal, having trouble with website members, and several other things that were pissing me off.
When I wrote those posts I was ready to throw in the towel because it seemed that nothing was going right.
Fast forward to now, several weeks later and things are getting back to normal. Adsense earnings are back on track, Kontera earnings are right up there with (and sometimes better than) Adsense, I won 2nd Place in Kontera’s Video Contest, members are back under control at the website, PayPal gave me back my money, and best of all, April 2008 was a record month for earnings, coming in at just a hair over $14,000.
I knew April would be a good month because of being forced to change subscription members from low-priced monthly fees (via PayPal) to a single, higher-priced flat-fee via Google Checkout. But what has been surprising to me is that the new Premium Member sign-up rate has remained almost constant even with the higher (one time) fee. Although I highly doubt that we will break our April earnings record it looks like May ‘08 will be another very good month - the best part is that I can say fuckyou PayPal, GoogleCheckout is more than happy to take my transaction fees (and Google Checkout fees are lower!) .. Although as usual i’ll be under the gun to make sure that Premium Members are getting value for their money. I’m working on a new contest as well as some site-upgrades so hopefully we can keep everyone happy.
I guess the old saying about making lemon aid when all you have is lemons is true.
Uncle Sam Wants You! … To Pay Your Taxes
I just got back from visiting my tax person, and boy does my ass hurt. Seriously though - having an online business that rakes-in the gross earnings can really come back and bite you if you don’t plan ahead.
My online gross income for 2007 came in at just slightly under $80,000. Net income after all was said and done was about $72,000. Total taxes (state and federal) that needed to be paid was in the neighborhood of $18,000 (hard to tell exactly because the total tax is munged in with my day-job income as well as my wife’s). Because no taxes are withheld on any of my online income it would have been very easy to blow it all on fast cars, stereos, and other krap, and be left with $18k bill come April 15. Luckily last year I read a blog post somewhere (sorry, can’t remember who’s or i’d give you a link) that recommended planning ahead and how not to get stuck with a big tax bill. Since I didn’t follow all of that advice, I still have to write a check for about $10k, but since I was planning for it and have that cash set aside it doesn’t hurt quite so much.
If you know that you’re going to have a significant “additional income” (Schedule C) you should file quarterly estimated taxes. This is what I’ll be doing beginning THIS year. Had I done that last year I’d probably be getting a refund right now instead of having to send a $10k check. Instead of filing estimated quarterly taxes, I choose to have my current employer withhold an additional amount in each paycheck. Having additional taxes withheld is as easy as filling out a new W-4, and specifying the amount on line-6. Had I not done this I would have had to pay some serious under-payment penalties in addition to that $18k or so in tax.
Here’s a few other tips for anyone making money online for the first time:
- Report ALL of your “additional” income. If you made over a few hundred dollars from any particular advertiser they will send you a 1099 - they also send a copy to the IRS
- Report ALL of your PayPal income. It might be tempting to think that the IRS wont find out about your little PayPal empire, but if/when you get that audit letter you’ll be wishing you had reported it if you didn’t
- File quarterly estimated taxes if your earnings are up there with the big-boys
- If you aren’t sure you will be earning enough to file quarterly estimated taxes, at least submit a new W4 form and have your employer deducted an additional amount from each paycheck. My employer was deducting about $900/month, but it wasn’t enough
- Dont forget your deductions! I was able to write-off (legitimate) things such as the home office-space I use, a portion of my internet bill, home electric bill, and even my iPhone and bills (which really are for ‘the business’). Don’t get greedy or make stuff up - it’s not worth the risk
- If you aren’t sure of what you will need to pay, start setting aside some cash toward the end of the year - We had an extra $20k set aside because we knew we were going to have a big tax bill.
- Have an expert help you with your taxes. In the past we always did our taxes with TurboTax, but because of the significant online income in 2007 this year we decided to have an expert help. The cost of $250 was well worth it.
Paying taxes on your online earnings is part of the fun of making money online - but if you don’t plan ahead you could screw yourself. It might be too late for your 2007 earnings, but now is the time to start thinking and planning for 2008’s income.
Disclaimer: I am not a tax expert and I don’t even play one on the internet. I just got bored this afternoon after having my taxes done and decided to make a post about it. If you have questions or concerns about your tax shituation, please consult someone that knows what they’re talking about.
December Earnings: $274/Day
This will probably be my last monthly earnings report. Unless I am overwhelmed with reader-responses/requests, I will probably post earnings updates one or two times for the year from now on.
Total earnings for December 2007 were a record-setting $8,506. Even though Adsense was at it’s lowest in months (2nd lowest month of the year), premium subscriptions at over $4,800 pushed us way over the top. Kontera performed about average, at just over $1,100.
This month was a record for expenses (and tax deductions!):
- Server Hosting: $175
- $175 for contest prizes
- ~$750 for Mugs, Shirts, Mousepads, and other giveaway items to keep around the office for contests and whatever else comes to mind.
I was fearful that December would be a slow month, but instead it turned out to be a record-breaker - despite the second-lowest Adsense month of the year.
Here’s to a great 2008 to all my readers.
How DO I Make Money, Anyway?
Not a week goes by that I don’t get an email or a comment asking:
“How do you generate so much income? I don’t see any ads in your blog??”
Long-time readers know the answer already and it’s in my About page, and also on an old post titled “I’m not a blogging whore“, but I think it’s good to post it here from time-to-time for the new readers and passers-by.
Where my earnings come from
Just about two years ago I created GrownUpGeek.com. That website has grown into a community with (as of today) over 13,000 active members, and that is where 99.9% of my earnings come from. Mostly from Premium Subscription memberships, Adsense and Kontera. I also have another website that I’ve been working on for just over one year, but it only generates a few dollars per month. Because the majority of my time is spent at GrownUpGeek.com, I have not been able to spend the time necessary to get this other website off the ground.
So anytime you see me blogging about how much I earn, number of visitors, contests, etc, chances are it’s in reference to GrownUpGeek.com.
