Money Matters: How To Start an Online Business

Money Matters: How to Start an Online Business

Learn ways to earn extra money from your business and how to navigate the financial side of hiring employees, using freelancers, and business tax reporting.

28 minutesEstimated read time


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DISCLOSURE: Some of the links in this article may be affiliate links, which may provide compensation to us from the service providers at no cost to you if you decide to use their services.

Congratulations! You’ve made it to the last step in our guide to starting an online business. In this last article, we will discuss several important topics about money as it relates to your new business.

We’ll cover ways to supplement your primary business income by exploring other channels of revenue, such as showing ads, doing affiliate marketing, creating a membership program, and offering merchandise.

Then, we’ll dive into human resources topics, such as paying employees and contractors and providing employee benefits.

Finally, we’ll tackle the dreaded topic of business taxes! 😱

So, buckle your office chair belt, and let’s begin!

How to Start an Online Business: Complete Checklist for Beginners
How to Start an Online Business: Complete Checklist for Beginners
A must-have beginner’s guide for starting and launching your online business! Easily track your progress and make sure you don’t miss anything!

This is Step 8 of the 8 steps in the complete beginner’s guide to starting an online business.

Supplemental Income

Did you know it’s possible to make even more money from your online business beyond your core products and services?! 💰

Yep! Consider supplementing your business income with these auxiliary sources of income, which we’ll discuss in detail below:

Show ads on your site.
Get sponsors.
Use affiliate links throughout your site to get paid for sending your visitors to other websites.
Create memberships and subscriptions that give customers special access to products or services.
Offer brand merchandise, like t-shirts and mugs with your company logo on them.

Earn Money from Ads, Sponsors, and AdSense

Once you have a website up and running that is bringing in regular traffic, you might want to consider showing ads on your site in order to monetize that traffic.

These types of ads are not marketing ads that help drive traffic to your own products and services (which you can of course do as well). Rather, the purpose of these ads is to send your visitors to 3rd-party products and services.

🙋‍♀️ Why would you advertise 3rd-party products on your site? Well, frankly, it’s because you can get paid to do so!

PRO TIP: Because you are indeed sending off your beloved visitors to another site, you need to be very strategic about where and when you’re showing the ads and where you’re sending your visitors to.

Ideally, you want to show ads that complement your products or services, while also maintaining a high level of quality so that you don’t lose your visitors’ trust.

Here are the three common ways to earn money through ads:

Pay Per Click (PPC), calculated as Cost Per Click (CPC). This is where advertisers pay you each time one of your visitors clicks on their ad on your site.
Pay Per Impressions (PPM), calculated as Cost Per Mille (CPM). This is where advertisers pay you each time a visitor to your site views their ad. Usually, this is calculated per thousand impressions… hence the “M” for mille. This type of model is especially good for advertisers who want to create brand awareness and don’t necessarily want or need the visitor to actually click the ad to go to their site.
Pay For Performance (P4P) and Pay Per Action (PPA). This is where advertisers pay you when you send a visitor to the advertiser to complete a qualified action on the advertiser’s site, such as signing up for their newsletter, creating an account, buying a product, or signing up for a paid plan. This type of model is especially common for affiliate marketing.

You can work with a 3rd-party sponsor directly for specific products and services or use an ad network that will allow you to show a wide variety of 3rd-party products and services.

Sometimes other companies will want to become a sponsor and pay you to either advertise their brand or simply use their products or services. This can be a very powerful way of earning supplemental income.

Once your online business has gained some traction, you might naturally attract the attention of potential sponsors. Otherwise, you’ll likely need to do some work to seek out and contact potential sponsors.

Often, rather than pay by CPC, CPM, or PPA, sponsors will pay you a lump sum to advertise and promote their company for a given amount of time, or perhaps to create a blog article that features their company or their product.

The other very popular approach to showing ads on your site is to use an ad network.

Google AdSense is a very popular ad network that is used by over 2 million people. AdSense allows you to earn money from your site by automatically showing a variety of ads that are relevant and optimized for your site.

The amount of money you can earn from showing ads on your site depends on several factors, including your region, niche category, monthly page views, advertiser demand, user location, ad type, and much more.

For example, if your site is in North America and your site contains content about finance, Google says you might be able to earn $19k per year if you get 50,000 monthly page views:

Google AdSense annual revenue estimate for North America and Finance category.

You can place ads pretty much anywhere on your site, but here are some popular ad placement locations you should consider:

Horizontal banner ads at the top or bottom of your site or article/product pages.
Vertical ads in the left or right column of your article or article/product pages.
Inline ads that flow within your article/product pages. These can be display ads that include images and videos. Or, they can be text ads that contain text links, which is a very common approach for affiliate marketing.

Earn Money from Affiliate Marketing

In the last article, we discussed how you can create your own affiliate program to drive traffic to your site. Well, now, on the flip side, you can use affiliate marketing to help produce more income from your site by promoting other products and services.

In other words, you can become an affiliate marketer and strategically place links to 3rd-party products and services that complement your business throughout your site.

How to Start Affiliate Marketing
How to Start Affiliate Marketing
Learn how to become an affiliate marketer and start earning passive income today! A complete guide for getting started with affiliate marketing and finding affiliate programs.

Similar to regular ads, you can show banners and images that use your affiliate links. However, the more common approach is to place your affiliate links within the context of your product page or blog article.

In case you missed the last article, affiliate marketing is where you promote a 3rd-party product or service to your visitors in exchange for a fee or percentage of any sales the advertiser makes when your visitor uses your link and makes a purchase on their site.

With affiliate marketing, advertisers usually track your visitors via your affiliate ID that you include in the URL link that they click on your site. Then, when your visitors make a purchase on the advertiser’s site, the advertiser knows who should get the referral fee.

PRO TIP: A super important point about affiliate marketing is that there is no charge or extra fee to your visitors. In fact, visitors often can get a discount by using your affiliate links, saving them money.

It’s a win-win-win scenario: you earn extra money, your visitors discover helpful products and services, and the advertiser gains a new customer. 😁

To become an affiliate to promote products and services from other companies, you first need to check to see if the company offers an affiliate program (there’s usually a link to the affiliate program in the footer on their website).

Then, depending on how they set up their affiliate program, you need to either join their affiliate program directly from their site or sign up for their affiliate program through an affiliate marketing network that they use.

When reviewing affiliate programs and networks, your business is considered a publisher of content. So, be on the lookout to create a publisher or affiliate account.

If you’re interested in adding affiliate marketing links to your business website or blog, check out these popular affiliate marketing networks that provide access to a large collection of advertisers in one spot:

Affiliate Marketing Networks

They have over 10,000 advertisers that you can choose from. In fact, unlike other affiliate networks, FlexOffers also acts as a network of networks. That is, they already signed up as an affiliate in many affiliate networks, and then allow you to join under them as a sub-affiliate. This means that they take a small share of the affiliate fee you would normally earn directly. Though this might sound like a bad deal to you at first blush, it’s important to note that you can often get approved for many high-end affiliate programs through FlexOffers that you normally wouldn’t be eligible for or approved for when applying on your own directly.

PRO TIP: If you apply to become an affiliate directly with a company, but are declined, you might want to check to see if you can join your desired program via FlexOffers. It is often the case that you can still get approved when going through FlexOffers since they already have an arrangement with the company and sort of act like a buffer.

For what it’s worth, I’ve personally used this technique successfully for several affiliate programs.

Also, to help soften the blow of the lower rates you’ll get as a sub-affiliate, FlexOffers has a second-tier program that allows you to earn even more money by attracting new affiliates to their network… like I’m trying to do here! 😉

A very popular affiliate network. Hundreds of affiliates join their network each day. Their affiliates have access to over 21,000 brands and earned over $1,300,000,000 last year.
They also own ShareASale. However, Awin has an even wider reach, since they offer products and services across many languages and currencies. ShareASale focuses more on English-speaking users. The two services complement each other.
If you run a travel-related site, this travel affiliate network is for you! Used by over 350,000 travel bloggers, they have over 100 travel brands. Their catalog is comprised exclusively of travel-related affiliate programs, including many well-known travel companies, like,, Tripadvisor, Trivago,, etc. They also offer widgets and tools you can embed in your site.

And if you’re looking for specific affiliate programs to join, here are a variety of programs across various categories that you might want to consider joining. There are thousands of them out there! 🤪

Affiliate Programs

Lots of products and services that you can promote, including Fiverr (their popular freelance marketplace), Fiverr Business, Fiverr Logo Maker, Fiverr Learn, Fiverr Workspace, and more. Easy to sign up and get started.
Affiliate program for their cloud storage service and password manager that can earn you up to $200 for each sale.
Affiliate program for their Anyword AI copywriting platform that uses artificial intelligence to create all types of content. They offer either a 40% recurring commission or up to $399 for a single sign-up.
Affiliate program for their all-in-one sales and marketing platform. They pay a 40% monthly recurring commission and recently paid out over $22,000,000 to affiliates in one month!
Affiliate program for their popular web hosting services. They pay up to $125 per sale. Their top affiliate has earned over $500,000.
Affiliate program for their SEO toolkit and keyword research platform. They pay a recurring 30% monthly commission.

Earn Money from Memberships & Subscriptions

Another way you can earn some extra money from your existing online business is to create a paid membership program or subscription service.

With a membership program or subscription service, you ask your customers to pay you a small fee on a regular schedule, usually in exchange for access to special features or otherwise private content.

A membership program can act like a paywall that can help generate more money for your business, supplementing your income from your primary business.

Here are some ideas for setting up your membership or subscription program:

Provide multiple membership levels or tiers that unlock more features or content as customers pay for higher tiers.
Some types of content that you could provide to members might include private blog articles, online courses, downloadable digital files (e.g. images, videos, eBooks, resources, etc.), special discount codes, customizable products, and VIP access or invitations to events.

Here are some tools that can help you set up a membership program on your site:

Membership Program Tools

An all-in-one membership WordPress plugin that has a bunch of features, such as paywall tools, content dripping, subscription billing, course creator, members-only dashboard, digital downloads, and more. Integrates with thousands of popular plugins and services.

Earn Money from Brand Merchandising

Another popular way to generate some extra cash for your business is to offer branded merchandise.

This includes things like t-shirts, sweaters, mugs, and stationery with your company logo on them.

Not only is branded merchandise a great way to earn some extra income it is also a great way to market and promote your online business.

Nowadays, with print-on-demand (POD) services it is super simple, affordable, and low-risk to provide branded merchandise to your customers.

POD services allow you to upload your custom design, such as your business logo, and then place them on a slew of merchandise, on anything from clothing to bathroom curtains, from housewares to mobile phone cases, and from candy wrappers to actual chocolate bars molded into your design! 😍

The best part is that your custom products are not manufactured until a customer creates an order. Then, the POD service creates the product and can even ship the product directly to the customer without you having to do a thing except receive your royalty share for the sale.

We discussed on-demand printing in lots of detail in Step 4, but that was in the context of using POD as your main business product. However, the process is very similar if you just want to use POD to sell some branded merchandise.

You can either integrate your brand merchandise store directly into your existing online business website, or you can simply link to a stand-alone merchandise store that you create separately.

Here’s a quick review of some merch-on-demand services (but I’d recommend checking out that other article, too!):

Print-On-Demand Services for Brand Merchandise

E-commerce store for digital and physical products, including on-demand merch. They offer a 14-day free trial without needing a credit card.
They have lots of integrations and are used by over 500,000 merchants. They also have a free plan to get you started that includes unlimited product designs.
They can connect to your online store or marketplace and have a lot of integrations. They also deal with manufacturing and fulfillment in the US and globally.

Other Money-Making Ideas

Also, make sure to check out our related article that explains dozens of creative and proven ways to make more money with your blog!

Ways Bloggers Can Make Money
33 Ways Bloggers Can Make Money in 2023
Lots of creative business ideas for bloggers to make money from their existing blog, experience, fan base, expertise, and writing skills.

Human Resources (HR)

If your online business is more than a sole proprietorship or requires you to outsource some work, this section about HR is for you!

In particular, we’ll focus on just a few money-related aspects of your HR department:

Hiring employees.
Employee benefits and total compensation packages.
Outsourcing work and using contractors.
Payroll systems and services for paying your workers.


Hiring employees for your business is a major step that has lots of ramifications, including significant financial ones. With respect to the money side of hiring employees, here are some things you should consider.

The cost of having employees is more than just their salaries or hourly rates. For example, look at the following common costs and benefits you might provide (or have to provide) depending on the size of your company and other factors:

Social security and medicare contributions. As an employer, you have to pay half of what’s due for your employees.
Health, dental, life, and disability insurance. You might have to pay a portion of any insurance benefits you provide to your employees.
Workers’ Compensation Insurance. Your local government might require you to pay for this insurance if you have employees.
Paid time off for vacations, sick days, and holidays.
Paid medical leave.
Wellness programs.
Employer-sponsored retirement plans, such as 401(k)s and 403(b)s.
Stock options.
Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).
Education assistance, tuition reimbursement, and student loan repayment.
Minimum wage, overtime pay, bonuses, and raises.
Unemployment compensation contributions.
Office space and furniture.
Equipment and software that your employees might require to do their job.
Industry and marketplace fees, subscriptions, and memberships that might be required for each employee at your company.
Relocation, housing, and commuter expenses.

All of the benefits and costs above should be included when considering and calculating an employee’s Total Compensation package.

You should also not forget that there is a cost (both time and monetary) to finding, interviewing, hiring, onboarding, training, managing, and firing employees! 😲

Outsourcing & Using Independent Contractors

Instead of hiring new employees, or perhaps in addition to hiring employees, it might make sense to outsource your work to a 3rd-party company or hire independent contractors or self-employed freelancers for specific projects.

You can contract out tiny, one-off projects like designing a logo for your business… or go big and even outsource entire departments, like Operations, IT, Manufacturing, or Engineering!

Here are some outsourcing and contracting tips and tricks that could save you time and money.

Consider outsourcing work that you or your employees are not good at, that you don’t like doing, that you don’t provide extra value to, or that can be done significantly cheaper and better by another company or contractor.
Test out and get used to the process first by outsourcing a small project or less-important department before going all in.
Clearly communicate and document your project requirements and make sure the outsourcing team or contractors are on the same page as you. Make sure to keep the lines of communication open throughout the entire project.
Consider using freelance marketplaces to get and compare multiple bids for your projects. Make sure to do a bit of investigation into each freelancer to make sure they have high ratings and reviews, a solid portfolio, and a good track record.
If you had a good experience working with a freelancer or company on a previous project, definitely consider using them again for future projects. This could end up saving you lots of time and make the whole process a lot more efficient and pleasant.
Use an automated back office tool that allows you to create and track proposals, contracts, tasks, time, invoices, and payments.
When comparing the cost of using a freelancer or outsourcing a department to hiring your own employees, make sure to do an apples-to-apples comparison. That is, you should calculate the total cost of outsourcing your work and compare it to the total compensation package for any employees you would need to hire, as we discussed in the previous section.
Make sure to re-evaluate your outsourced work from time to time to see if it still makes sense to outsource your work instead of hiring employees. For freelance work, consider re-evaluating after every major project. For ongoing outsourced departments, consider creating a repeating alert event in your calendar so that you get automated reminders every so often to re-evaluate.

Here are some marketplaces and services you might want to check out if you’re planning on outsourcing work or hiring an independent contractor or freelancer.

Freelance Marketplaces & Outsourcing Services

A very popular freelance service marketplace for pretty much any type of work at any budget. If your project requires exceptional talent or team tools, check out their Fiverr Business service.
A well-known talent marketplace that covers many categories, such as Development, IT, Sales, Marketing, Admin, Support, Engineering, Design, Writing, Finance, Legal, and more. Clients give the talent at Upwork 4.9 out of 5 stars based on over 2.9 million reviews! They also offer an Enterprise Suite for access to their top 1% of talent.
A freelance marketplace focusing on designs and creative projects, such as logos, branding, websites, apps, business, advertising, art, illustration, packaging, etc. They also integrate with VistaPrint, which allows you to order physical materials, signs, and products using the designs.


Payroll is a term that refers to the compensation process for your employees over a given time period.

Payroll can also include the management of other employee compensation-related items, such as employee benefits and taxes.

When you hire employees, you will be required to pay them an agreed-upon amount at regular intervals. This tracking and processing of payments can quickly eat up a lot of your time and be prone to error if done manually, especially when you take into account the multitude of tax calculations and reporting that will be required.

Therefore, it’s vital you set up some sort of payroll software system to help you with the process and automate most of the steps.

There are a ton of payroll services and tools out there, but here are just a few popular ones to get you started.

Payroll Tools and Services

Used by more than 200,000 businesses and integrates seamlessly with FreshBooks accounting software. Recommended by PCMag, NerdWallet, and U.S. News & World Report.
Used for employee management, payroll processing, benefits, taxes, payroll metrics, and payroll administration. Part of Zoho’s giant suite of business and financial tools for your back office. Also make sure to check out Zoho Finance Plus, Zoho Books, and the Zoho One all-in-one bundle.
Part of the very popular Square suite of payment and business tools. Offers full-service payroll, automated tax filing, and management of employee benefits.

PRO TIP: In addition to reviewing the services above, make sure to check your existing accounting, bookkeeping, and payment services to see if they offer an integrated payroll component you can use, potentially even as a free add-on!


Finally, no checklist or guide for starting an online business would be complete without talking about taxes.

Hardly anyone likes dealing with taxes. Sure, this is a required step, but there are tips and tricks that can actually help save you money!

In this last section, we’ll cover the basics of business taxes, as well as help you make the most of your write-offs and tax breaks. We’ll cover:

Tax tracking tools.
Business expenses, write-offs, and donations
Tax reporting software.
1099 reporting for contractors.

Although we already covered business accounting software back in Step 3, make sure to go back and review that step if you haven’t yet chosen or set up your accounting system.

Tax Tracking

It might be obvious to most, but it is extremely important as a business owner to keep detailed and accurate records of your business expenses for tax purposes.

Not only will you need those records to calculate your total annual expenses, but you also might need to show proof of those expenses, in case you get audited by the IRS.

Here are some important steps to take for tax tracking purposes:

Keep your business and personal accounts separate. Make sure to open and use a business account that is only used for business income and expenses. Generally, it is a bad idea to use your personal account or credit cards to buy things for your business. You want to make sure all of your expenses are cleanly separated from your personal life.
Keep track of and store your paper and digital receipts. For physical receipts, store them all together and in an organized fashion. Use envelopes, binders, folders, and filing cabinets as necessary to keep everything organized. It may also be helpful to scan your receipts so that you can track everything digitally.
Use accounting and bookkeeping software to track, collect, organize, summarize, and analyze your business expenses. Although it is possible to do everything manually by hand in a spreadsheet, this has many drawbacks, including being more prone to calculation errors.
Make sure your accounting and payroll software correctly calculates and keeps track of all business tax, employee tax, sales tax, value-added tax (VAT), etc.

Expenses & Write-Offs

Spending money as a business actually has its perks. In particular, most businesses can write off qualifying business expenses when reporting their taxes. This means that your business can reduce your taxable income by that amount, thus lowering your overall tax liability and putting more money into your pocket.

Write-offs are a type of legal tax deduction allowed by the IRS and your local government. NOTE: Each state and industry may have specific rules about what you can and cannot write off for your taxes… so do your research and consult a certified public accountant (CPA), enrolled agent (EA), or professional tax preparer!

Writing off business expenses can therefore be a very powerful tool for saving you money and increasing your overall business profits!

Therefore, it’s important to research exactly which business expenses you can write off. Many expenses qualify, but not all… and the IRS might limit the amount of particular expenses that you can write off, possibly only giving you a portion of savings.

PRO TIP: A tax credit is an even more powerful benefit for small businesses. Tax credits apply directly to the total amount of taxes owed. So, rather than reducing your total taxable income, tax credits reduce your final tax payment, dollar-for-dollar!

Also, be on the lookout for industry-related and geographic-related tax credits that might apply to your specific business.

Here are some common tax deductions and credits available to many small businesses that can help save you money:

Startup expenses, possibly up to $5,000 that you initially spent when investigating and setting up your business.
Office supplies, computers, laptops, printers, copiers, stationery, shipping, etc.
Expenses for business software, online services, web hosting, domain names, servers, mobile phone service, Internet service, etc.
Travel and commuting expenses, including your car, gas, tolls, and maintenance, as well as airfare, hotel fees, and car rentals when meeting with remote clients and employees.
Business entertainment and meals. You might be able to write off 50-100% of entertainment for clients and employees, and meals during which you discuss business. Make sure to keep accurate receipts of these events, including a list of the clients and participants.
Advertising, promotion, and marketing expenses.
Investments and retirement contributions.
Salaries and employee benefits.
Professional service fees, such as for legal, accounting, and tax services.
Banking fees and interest.
Business asset depreciation.
Charitable contributions made by your business.
Child and dependent care expenses.
Real estate taxes and mortgage interest for your business.
A portion of your home expenses relative to the percentage of your home that you use exclusively for business. This might include your office space, storage areas, etc. Some home expenses you might be able to write off include things like your mortgage interest, HOA fees, home insurance, house repairs, etc.
Moving and relocation expenses.
Education and conference expenses for you and your employees.
Tax credits for energy efficiency assets, services, and utilities, such as energy-efficient water heaters, solar panels, electric cars, alternative energy sources, wind power, etc.

As you can see above, there are lots of ways to save money… so it is definitely worthwhile to consult a tax expert so that they can give you personal advice for your specific situation!

Tax Reporting

Small businesses are usually required to report their taxes annually to the IRS and to the states they operate in, either based on the calendar year or the business’s fiscal year.

However, businesses must still pay quarterly estimated taxes throughout the year. If you fail to pay estimated taxes, you may be charged an underpayment penalty.

Your exact tax reporting procedure will depend on the type of business you set up.

Generally, sole proprietorships and other pass-thru tax entities such as LLCs and S Corporations will require you to report business income on your own tax returns. Businesses with other structures, such as a C Corporation, usually have to file separate tax returns.

PRO TIP: If your business wasn’t in existence for your entire first tax year, it is called a short tax year. You’ll usually still need to pay taxes as normal, but some limits and requirements may be prorated or different than a full tax year.

As a business, you’re responsible for paying the following types of taxes:

Federal and state income tax. In the US, you’ll pay your federal tax to the IRS and your state taxes to each state where you have tax nexus, which usually means each state in which you have a physical business presence, such as a building, employee office, or goods.
Social Security tax. If you are self-employed, you pay the whole amount, which is currently 12.4%. If you have employees, you pay half of their Social Security tax and the employees pay the other half. Social Security tax is currently limited to the first $160,200 of earnings, but this value often increases each year.
Medicare tax. If you are self-employed, you pay the whole 2.9% based on your entire earnings. If you have employees, you pay half and your employees pay the other half.
Sales and use tax. In the US, when you sell goods in person or online, you may be required to collect sales tax from the customer and then pass on that sales tax to the city, county, or state where the transaction was performed. These calculations and payments can get very tricky very quickly, so I’d highly recommend you use robust accounting and payment transaction software that will help you collect, track, and report sales tax on the goods you sell.
Value-Added Tax (VAT). Similar to sales tax in the US, this is a consumption tax on goods and services that is used within the EU and in over a hundred other countries around the world. If you run a business in the United States, you are not required to collect or pay VAT for the goods and services that you sell.

Make sure to check your accounting and payroll software to see if they have features to automatically calculate and/or pay the various taxes above.

I highly recommend using a robust online tax service, such as the ones below:

Tax Software & Services

A giant in the tax industry and used by millions of people, they offer both online and downloadable tax software. In addition to using their services for your personal taxes, you can use their software to electronically file your business federal and state taxes. They even offer full-service solutions with online access to tax experts and CPAs who can help you while you prepare your taxes.
A tax tracking, preparation, and reporting app that can be used by anyone, but can be especially helpful for freelancers and contractors. Simple pricing with no upsells and includes accountant support and audit protection.
A well-known tax company that has been around for a very long time. They guarantee that you’ll get the maximum tax refund you can get, and they have experienced tax professionals that can help you along the way.

1099 Reporting

The last business money matters topic we’re going to cover is about 1099 reporting, which is a very common tax form required by the IRS for reporting payments to non-employees.

Specifically, your business should fill out and send a 1099-NEC form to each freelancer, independent contractor, and independent service provider to which you paid $600 or more in the tax year. You should also file each filled-out form with the IRS.

A 1099-NEC tax form is sort of like an employee W-2 form, but for non-employees. In fact, NEC stands for non-employee compensation. 😉

PRO TIP: The reporting of non-employee compensation used to be included in the 1099-MISC form, but has since been separated out by the IRS onto its own form: the 1099-NEC.

Usually, your business will be able to write off the value you report on your 1099-NEC forms. However, the freelancer or contractor you paid will need to report your payments as income on their own tax reports.

The 1099-NEC form also helps prevent under-the-table and cash-only dealings where the freelancer or independent contractor might otherwise try to hide their earnings from the government.

You must file all 1099-NEC forms by January 31 each year.

In order to ensure that you file the 1099-NEC using the contractor’s valid tax ID, you should require that the independent contractor fill out and send you a W-9 form, which states their legal name, entity type, address, and tax ID (TIN) such as an SSN for individuals or EIN for businesses.

TIN matching is the process of verifying a contractor’s tax ID with the IRS before you file the 1099 form. This helps ensure that everything goes smoothly and that you’re reporting payments to the correct entity.

Your tax software might include a 1099-NEC reporting feature. Otherwise, many online services exist that can help you generate, track, send, and report 1099 forms. For example:

1099 Reporting Tools

Easy-to-use online service for 1099 reporting. They offer TIN matching, bulk importing, e-filing, and notifying contractors through email and physical mail. I’ve personally used their services for several years.


And just like that… we’re done! 😁

Congratulations on making it all the way through the 8 steps in this guide to starting a new online business!

I wish you all the best and lots of success with your new venture!

If you found these articles helpful for your business, please share them with your family and friends, and on social media. Thank you!