adsense and taxes

[thomas]

For anyone who runs websites and makes money with Adsense or YPN, I'd like to know how you do at the end of the year with taxes.

[fultron]

Re: adsense and taxes

It depends on how you file. If you're just an individual or sole proprietor you can declare it on a Schedule C and file it with your 1040. Partnerships and corporations are a bit different.

[twins0203]

Re: adsense and taxes

Last year I did this as an individual w/ Adsense and got a 1040.

This year I've registered as an LLC so that I can hopefully write off alot of my expenses. It's going to be a learning experience for sure though.

I kind of am expecting an audit this year because w/ my YPN earnings, my income is drastically increased.

[greedy4chips]

Re: adsense and taxes

I kind of am expecting an audit this year because w/ my YPN earnings, my income is drastically increased.

This intrigues me! How drastically and care to share your success story?

My website would only cost me money in the long run to use adsense, so I cannot see using it.

[twins0203]

Re: adsense and taxes

One of the reasons using YPN is preferred over Adsense, is since they are currently in BETA, they seem to be paying more per click that you can serve. But the drawback to YPN is again since they are in BETA, it is hard to get accepted, sometimes takes months. We lucked out and got an account right as they opened the doors. But if you don't have a YPN account, Adsense can still be very profitable.

Right now I work a PT job 4 days a week, which is about 16k/YR , my earnings for the past 4-5 months on YPN has been a little over 33k, which is my part. I have 2 other partners that are equal 33.3% each as I am, so that is quite a chunk of change. Those numbers are no way meant to be "bragging", just showing you that big numbers can be pulled and that is how drastic of a change to my income has been.

So making alot of money via Adsense/YPN is definately possible. I doubted it at first, but have luckily found out first hand that it can happen. I've seen posts in some forums where people's checks each month is over 100k. Alot of sites that you may visit everyday, you may not think about it, but could easily be pulling 1k+ a day. Automotive forums, I used to be big in those as a member, are making no telling how much from companies advertising on their sites.

The key is mostly getting lots of traffic and exposure to your site and the content of your site. Content matters because since text ads are contextual, they pull from your content, so if you have a website where advertisers would normally pay like 20c per click, you will make a little less than that, but if you have a site that has content where advertisers would be competing w/ each other and paying $1/click, you'd make much more.

I'm not quite sure what you mean it would cost you money to use Adsense. Do you mean replacing the ads you may be running on your site now w/ Adsense ads?

I'd definately encourage anyone though that likes creating websites and that type of stuff to give it a shot, you may be surprised at how a well layed out site could make some extra money on the side

[fultron]

Re: adsense and taxes

This year I've registered as an LLC so that I can hopefully write off alot of my expenses.

You don't have to incorporate in order to write off expenses. Sole proprietors can itemize and deduct their business expenses right on their schedule C, then carry the profit/loss over to their 1040.

[twins0203]

Re: adsense and taxes

I didn't know that, thanks for the info. We also registered for the added protection to personal assets.

[greedy4chips]

Re: adsense and taxes

twins,

Thanks for the extra info! Perhaps I don't understand the whole purpose of adsense and YPN. Are you paid for every click on those ads or only the clicks that actually purchase something once they go to the other site?

I ask because using your automotive forum example, why wouldn't you just run your own ads for these auto sites using their affiliate programs if they have them.

If they don't have affiliate programs then it is obvious why adsense would work best.

I would love to create about 5-6 more sites making me $500 or so a month. I am not greedy just interested in making money in my spare time!

[twins0203]

Re: adsense and taxes

My pleasure

Adsense and YPN are Pay Per Click programs, meaning that no leads or sales have to come from the clicks in order to get paid. I believe that Adsense has introduced some CPM (paying you per thousand impressions) ads, but the most part they are all CPC (cost per click) ads served.

So for example, I'm not quite sure the actual pecentage Adsense or YPN keeps themselves, but if an advertiser pays $1 per click, and YPN keeps 25%, for each click for that particular advertiser you would earn 75 cents. It doesn't sound like a whole lot, since some clicks could earn you like 5 cents or so, but it adds up quickly.

Thats the thing about automotive forums, is you would want to use Adsense or YPN to earn revenue from the site, but as it grew very large, you might would pick up some direct advertisers that would actually earn you more overall than depending on Adsense or YPN would. It's pretty much just trying things out and seeing what works best, because on some sites it might would be more profitable to just serve Adsense or YPN ads.

I guess the big advantage of using Adsense or YPN over signing up as an affiliate, is you wouldn't have to depend on the users that click the ads on your site to convert into signups/sales at the advertiser. Once your ad is clicked, that is all you would worry about or want because revenue for you ends there.

That was exactly my goal, $500 extra a month to help out. And it just grew from there. So the possiblities are endless as long as you can drive traffic to your site and have your ads in a place where they would get noticed and therefore clicked.

I'm more than happy to answer any other questions you might have about Adsense or YPN

[terry1156]

Re: adsense and taxes

I get conflicting reports on these programs from people. Some seem to say it's easy money while others say it takes a lot of work to earn money with these programs. I've been debating for some time whether or not to try creating a site, but still don't have a good grasp of how difficult it is to do so.

I have friends that have sites that have been up quite some time that don't earn very much and I'm wondering why some of these sites that have only been up less than a year are making so much more than them. I realize that the key is traffic from the threads I've read, but how do you obtain that traffic?

Twins - If you're earning close to $100,000 a year, what type of advertising costs do you have? Is that with no advertising? How long has your site been up? Do you mind sharing what the site is?

[twins0203]

Re: adsense and taxes

I guess how easy it is depends on the type of site that you are releasing or already have. The key is definately traffic, because with a CTR (Click Through Rate) of 2% on average, with 100 visitors, you would usually have 2 clicks. But if you had 10,000 hits in a day, you could almost expect 200 clicks, which would drastically increase your revenue earned. One other key thing, is finding a niche that is not overdone (for lack of a better word) so that your site would stand out. Not saying that if you do a site that is similiar to another, that you wouldn't do well though.

For our sites that are making the money, we've found sites that have similiar content to advertise on that usually have between 500-1000 visitors on at almost all the times of the day. We've purchased banner spots on these few sites. So if we can get some pretty good clicks on our ads on that site, we'd have decent amount of traffic to ours, which would convert to clicks on our YPN ads. We've also been running a little bit of Adwords to hopefully get some more quality traffic to the sites. Our advertising expenses are about $1700/mo.

If you want to give Adwords a try, I have a link that will give new users $50 free credit.

My sites have been up since about March. Shortly after launching them, we were able to find those sites to advertise on.

I don't want it to sound like you just put a few hours into making a site and advertising it and be making lots of money. We were in a hole $3k for several months before things started to turn the other way. It takes time to put some new content on the site regularly to help keep your visitors wanting to come back. Another biggie, is ad placement. There are supposedly hotspots where users first look and are supposed to help increase your CTR. JenSense.com has some good info that you may want to read around on.

We are each taking a dividend each month now, but are leaving some working money in the pot for other projects. We are going to be doing a Hosting and Reseller site soon, to try to get some residual and solid income coming in each month. That way if something unexpected were to happen with our ads type sites, we'd still have some extra money coming in.

[fultron]

Re: adsense and taxes

Some seem to say it's easy money while others say it takes a lot of work to earn money with these programs.

If you're talking about making a few dollars, I think it' pretty easy. But if you want to make serious money, it takes a good deal of work.

Twins makes a lot of good points. You need a high volume of targeted traffic and you need your visitors to actually click on your ads. You must NEVER ask or suggest that anyone click on the ads or your account will be terminated.

But by placing the ads in 'hotspots' you can increase you clickthough rate significantly. Google publishes a map showing where the hotspots are, but you can experiment a bit on your own site to see what works best for you.

Try blending your ads in with your content to make it look natural. Use the same color scheme so they don't stick out like a sore thumb.

The topic of your site also plays a big role in how much you earn. Remember that merchants are bidding on keywords to bring them traffic so THEY can make money. If you choose a topic that few people are bidding on, the earnings will be low. You need to find topics that have lots of merchants competing with one another. Think about credit cards, debt, and pretty much anything to do with money.

Concentrate on promoting your site and adding fresh content regularly. The more articles and content you have, the more chances you'll give yourself to bring in new visitors (and income).