Category Archives: Business

Should You Opt Out of Behavioral Advertising Or Profit From It?

Written by in Business
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There are tons of way to make money online, but I recently heard of one that sounded a little questionable.

Working in the online advertising world, I’m always introduced to new ways to make money. Recently, however, I was introduced to a new way of making money online. It’s something you put on your website, but it doesn’t bother users; in fact, users don’t even notice because it’s hidden inside the code.

Website owners can install a pixel that tracks users even after they leave your site. The tracking pixel records what websites you visit and your patterns. This information is then sold to advertisers.

Check out the National Advertising Institute‘s site. Look at that list and see how many companies are doing this. And look at how many are tracking you right now! Can you believe it??

It seems kind of seedy to me. Why sell user information without being totally upfront? Sure, you might have a privacy statement hidden somewhere on your site, but it’s not apparent from visiting a homepage that a user will be tracked even once they leave the site. I have no problem with you using information from a site that I use. But when I leave your site, leave me alone!

On the other hand, did you know Google does this constantly? They know your shopping preferences and they serve ads to you based on your likes and interests and past search and browsing history. I constantly have financial products being shown to me, no matter what site I visit.

Is it really such a bad thing? Personally, I’d rather have ads appear that interest me rather than random ones. Why have products I don’t care about come up when I can have TurboTax and Jos A Bank ads follow me around the Internet?

Still, I would never do this to my readers because it’s not upfront and honest. Plus the payouts are really small, like a few cents for every 1,000 visitors, so definitely not worth it.

As for opting out, there is good news! You can opt out of Behavioral Advertising. This includes over 80 advertising networks that use your browsing history, so simply opt out on the site and you won’t have to worry about any sneaky websites profiting from your online habits.

Readers, are you in favor of this? Are you going to opt out?

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Business and Personal Finance Goals For 2012

Written by in Business, Goals
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While reflecting back on the year I had in 2011, I promised I’d make some goals for 2012, so it’s time to reveal a little about what I think is important, both in terms of my site and my life.

2012 is an exciting year for me. I’m going to be getting married in June, I will be moving to a new apartment and have to take care of furnishing it and paying all of those one-time expenses that can add up, and I will be working like crazy to make sure my blog and online business ventures don’t get neglected!

It’s a little difficult to decide how much personal information to release through the blog. I like being able to interact with people and I like sharing my lessons with you. They’re interesting and informative and we can all benefit from them. However, there is some information that I want to keep private. This includes income (both online and in real life), so I prefer to give percentages rather than put numbers to it all.

My goals aren’t big on personal items, rather they are heavy on business goals, which definitely influence my personal life in a big way. So while I’m not promising to keep my monthly budget under a specific amount, my personal income and spending habits shine through.

1. Start 2 New Side Ventures

Since I’m starting a business that maybe technically started in 2011, we still haven’t launched yet, and most of the effort will come in 2012, I’ll allow it. For my other idea? I have absolutely no plans yet, but the more I experience, the more I think of income-producing ideas. They don’t always pan out, but with enough hooks in the water, I’m bound to catch something. With 334 days to go, I’m sure I’ll think of some new moneymaking idea at some point.

2. Double My Side Income From 2011

This is a big leap, 2011 was an amazing year for me, but there’s no reason to think I can’t beat it. I have a big head start in that I am not starting from the bottom like last year, so I have everything set up for a big year and I can continue what I’m doing while expanding and capitalizing on my new ideas and projects. Doubling my side income won’t be easy and is far from a guarantee, but I like to set high goals, and hopefully one of my other side businesses will help me get over the hump.

3. Save 60% of My Post-Tax Income

The sad thing about this one is that it’s not something I’m going to actively work toward. I no longer keep a strict budget, but I have guidelines. I don’t spend much money on frivolous purchases, but I don’t hold back from the things I want. Still, being able to save such a large portion of my income at a young age will only help me achieve whatever financial goals I make for myself in the future, so saving is definitely a priority for me.

4. Double My Net Worth

I’m getting married in June, and that means I’ll be taking on some addition student loan debt. This was never a real consideration for me, more a fact of life, but what it does is sets me back in terms of net worth. If I can achieve my first 3 goals, I think it’s still manageable and would be a large source of pride for me.

Readers, what are your personal finance goals for 2012? Did you set income and savings goals? Net worth goals? Personal goals?

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Paypal Income Reporting Requirements for Bloggers

Written by in Business, Taxes
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For tax year 2011, the IRS did something very interesting: they required payment settlement entities to file Form 1099-K for payment transactions. This includes PayPal accounts that received at least 200 transactions and $20,000 total during the calendar year.

If you’re a blogger, the majority of payments are made via Paypal, so this adds a completely new hassle to the income reporting equation. The two biggest problems are:

  • Not everyone uses their PayPal account solely as a business account. For sole proprietorships, some payments from businesses should be marked as income. However, payments made from friends shouldn’t be. The IRS requirement doesn’t differentiate the different payments (unless they are made as personal payments). Therefore, in some cases, the 1099-K issued by PayPal may over-report income.
  • This also raises the issue of being taxed twice on the same income. If someone pays me over $600, they are required to file a 1099-MISC. If they pay via PayPal, PayPal then records that payment on the 1099-K. We shouldn’t be required to pay taxes twice on the same income!

The 1099-K changes are designed to prevent tax evasion, which amounts to over $300 billion a year in the U.S. I like the idea of holding people responsible for their taxes, and this holds people accountable for their online business ventures which in the past may have gone under the radar. For example, eBay re-sellers are required to report their online income, but it’s been easy to avoid it in the past.

However, this puts a large burden on taxpayers. eBay sales of used goods will still show up on the 1099-K, even though they shouldn’t be considered taxable income (if you sell something for less than it’s worth, it’s generally not taxable).

Because this is so confusing, the IRS did something smart. Really smart. On December 6th, the IRS released the 2011 Instructions for Schedule C, the form to mark profit or loss from business, and in it they gave all business owners a little reprieve and helped us prepare for our 2012 taxes as well.

First, while the 1099-K requirement still stands for 2011, the IRS has deferred the requirement to report the amounts on the 1099-K.

“However, for 2011, the IRS has deferred the requirement to report these amounts.”

What this means is that while you may get a 1099-K from PayPal, you don’t have to record that number on your taxes. You are, of course, still responsible to pay taxes on your income that you received through PayPal, but you can do it the same way it’s been done in the past, by recording only the actual business income on line 1b. You can simply enter ’0′ on line 1a.

Additionally, the 1099-K reporting requirement eliminates the need for some 1099-MISC filings, according to Don Frank, partner-in-charge of outsourcing with CliftonLaronAllen. The 1099-MISC indicates (in a not-so-straightforward way) that businesses should not complete Form 1099-MISC if the payment will already be reported on a 1099-K. So if someone pays you via PayPal and you will be issues a 1099-K, you won’t need to be issued a 1099-MISC as well. This avoids the double taxation issue.

Kudos to the IRS for realizing what a hassle this would be for 2011. I’ve started to prepare for 2012 by separating my personal and business PayPal accounts and by tracking PayPal transactions separately so I won’t have to go through at the end of the year and figure out which transactions were included on the 1099-K and which need to be recorded on the schedule C separately.

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How to Obtain Capital for a New Business

Written by in Business
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I’m starting a new business with a friend, and we need about $5,000 to get started. We believe that after the initial funding, we will be able to continue without any more cash infusions and that we will be able to rely on sponsors and advertising after that.

But how do we get that initial $5,000? We don’t mind putting in some money, but $2,500 each is a little more than we were hoping for. So what options do we have for getting that initial funding?

We didn’t want to go to family and as for money. We believe in our product and because of that, we should be able to convince non-partisan parties to invest with us. When you go to friends and family, you risk causing uncomfortable situations later. This should only be a last resort, and we decided against it.

One creative option for us is to use a site like Kickstarter, which is a funding platform designed to help fund creative projects. There are several of them out there, and instead of having people invest in your business, people fund projects they believe in and the project owners give out perks for certain contribution levels. So you could give away a t-shirt to each person who invests $25, but all the money is the project owner’s to keep and never has to be returned.

It’s a risk-free way to get money for a project. The only downside is that you are releasing your idea to the general public and there’s no way to ensure that nobody will steal it. I think it’s a fairly small risk (especially since we are nearly done with building the site) and the benefits outweigh that risk.

As I wrote this article, I got a phone call from my investment partner friend who I floated the idea to a few weeks ago who would help us with some aspects of the business and also be an investor. We’ve been over the idea, showed him our site mockups, and explained in detail how the business would work, what role he would have, and the terms of the investment.

Looks like we are $3,000 closer to our goal, just $2,000 to go!

Readers, do you think we should fund it ourselves and assume the risk or go with Kickstarter to get the rest funded?

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