Many people think that the only way to make money online is to have a product to sell. When I tell people I make money on the Internet, 9 out of 10 of them assume I am selling something on Ebay or on a website and physically shipping it out myself. I did used to sell things on Ebay and after about 1000 packages I decided I had had enough. There must be an easier way to make money.

The myth that you must have products to sell is a natural one if you think about it. The majority of sites you go to do sell physical things and that is where a lot of our shopping is done nowadays. Amazon is among the most popular and you can buy almost anything there and have it shipped to you the next day. There are undoubtedly millions of websites that want your business and have a product ready to be sent out to you.

So, do you need to have a big garage or warehouse piled high with your inventory of items to be able to make money from home on your computer or is there another way?

Affiliate Marketing Is The Easier Option

There are probably thousands of ways to make money on your computer. Anyone who has researched how to start an online home business or just tried to find some simple things they can do to bring in a secondary income knows how overwhelming it can be. The Internet is a huge sandbox where you can build almost anything you can imagine and there are people at every turn who want to sell you their secret system.

The average man or woman on the street knows nothing about affiliate marketing and most, even in 2010, have never heard of it. They have no idea that every link they click on their computer screen could be making someone money. They really don’t have a clue that the things they do online, especially when they buy something, could be making someone else a commission.

What Is Affiliate Marketing?

Simply put, affiliate marketing is when you make a small commission for bringing someone to a website and they buy something. In some cases they don’t have to even buy anything for you to get a finders fee. It is like you are standing outside a real store on the sidewalk and you get paid for convincing people to come in to the store and buy. If they do buy you make a small percentage of the sale and depending on the deal you have made with the store, you might get paid something even if they don’t make a purchase.

It makes sense when you think about it as most businesses want more customers and they have advertising budgets to try to get those customers. Affiliate marketers are those people that make money online by trying to get people to go to other websites that they have agreements with and hope they buy. The more people that you can get to a website, the more money you stand to make.

It Is All Done Through The Links

Links can have all sorts of hidden code in them and that is how everything is tracked. When someone goes to an affiliate marketers blog or website and clicks on a link, they are taken to another website and through the use of cookies and code, the gods of the Internet know where that person came from. If they then buy a product, a commission is generated for the person who sent them there.

Every link you see when you surf the Internet can potentially be an affiliate link. Every click you make may be being tracked in case you buy. For the everyday net surfer all this happens without them having any idea of all the things that are going on. But for the affiliate marketer, this can be the way they are earning their living or at least making some extra money.

Can You Do It?

Affiliate marketing is great because you don’t have to spend much money to get involved. I started out with just one website and it can even be done on a free Blogger blog so you can technically start with zero out of pocket costs. It is not something that you can succeed at overnight though, as you need to learn a lot of things and really understand how to get targeted visitors to your website once you have one. There are over a billion websites on the Internet and you have to learn how to get people to find yours as they will just not magically come.

One of the best resources to learn exactly what affiliate marketing is and how you can get started is Rosalind Gardner’s Super Affiliate Handbook. She has made an impressive home business that is based on affiliate marketing and selling other people’s products. She carries no inventory and does not have to deal with shipping of any kind and neither will you. It will take time and effort and only you can determine whether you have what it takes but the rewards are definitely there.  

If you are looking for work from home jobs, you might consider learning something that can become your own business rather than just a job. When you have a job you can always be fired, laid off, or let go. With an affiliate marketing home business your sales may be down in tough times but you can never get fired. Putting together a network of websites is something that is exciting and you can see that you are building something of value. When the whole picture comes together for you and you start making a little money, the light bulb will go off in your head. You will start to see that the more you build, the more money you will make.

So, what’s the scoop on Internet marketing and paying taxes in the USA? If you are one of those people looking to make money from home either part time or full time, you need to know that the more successful you become, the more likely it is that you will owe estimated taxes. And those taxes will have to be paid quarterly by you sending in a check to the IRS. No withholding options are available here.

You can go to the IRS website for the complete rundown on this but two things have to happen for you to owe estimated taxes on the money you make online. First is that you have to owe at least $1000 in total taxes.(this was for 2009) If you don’t owe more than a $1,000 in taxes then you don’t have to worry about anything.

Second, all your withholdings have to equal at least 90% of what you will owe to the IRS at the end of the year. In other words, if you are going to owe $50,000 in taxes, then your withholdings from your real job better be at least $45,000  or more for you to NOT owe estimated quarterly taxes.

You see, in your “real” job, your employer has to take taxes out of your paycheck and send it in. That makes the IRS happy because they are always getting your money the minute you earn it. But for things like interest income, dividend income, gambling income, and any other side income you might have, there is usually no withholding. Therefore it is up to you to send in the money yourself and you have to do it quarterly as you owe it. The IRS is “nice” enough to give you that 10% leeway to make it a bit easier for many people.

Making money online is no different than any other kind of side income or second income you might have. YOU DO OWE TAXES ON IT but only if you make enough to satisfy both those rules. Many people who dabble in affiliate marketing online or any other method of making money, do it as a hobby and hold jobs in the real world. But once you start to become successful, the money you make online may very well be enough that you have to start paying quarterly estimated tax payments.

All the United States affiliate networks like MarketLeverage, Commission Junction, and ClickBank require your Social Security number because they have to send in a 1099 to the IRS at the end of the year. That means the IRS knows what you are making and if you try to not pay your taxes they will come after you. It also means that they will know when you are late with your payments and they will know if you are not making any quarterly payments at all. Then you will start to get those lovely IRS penalties that add up faster than the money you owed them in the first place.

Working online and making making money from home through affiliate marketing or blogging can be fun and in some cases lucrative. But it is a little less fun when you realize that if you are successful, you will probably owe tax on that money and there is no way out of it. In fact anything having to do with the IRS or the government is always less fun.

Interestingly, I do have an advertising degree and it wasn’t until I started looking for ways to make money online that I ever used any of the things I learned in college. Most college graduates who major in communications or advertising set out to find a job in radio, TV, ad agencies, or in advertising departments at major companies. They can make money by creating ads, buying ads, selling ads, and any of the many other things associated with the advertising industry.

I never went that route as I was scared it was too competitive and I didn’t really have a passion for it anyway. I ended up doing a variety of other things that had nothing at all to do with my college major and for that reason I always felt I had kind of wasted my 4 year degree.

It turns out that the advertising departments of companies all over the world are quickly starting to view the Internet as a very important component of their advertising efforts. Many people just don’t realize how much money is being poured into online advertising and how effective it is.

When a company takes out an ad on a sign by the road or on television, they are mostly buying brand awareness. That is obviously a very important thing to have over the long run but those ads never directly translate to money coming in right away. When you see an ad on TV for whatever product, you make a note of it in your mind and when you are in the store the next time that ad may or may not play a part in you buying that product and picking that brand.

On the Internet though, things happen more quickly and more directly. The online world is now the place where you not only see the ad but you can make the purchase right there as well. This gives the advertiser the ability to directly track the performance of their ads and find out whether they are adding to their bottom line. People have become very comfortable purchasing online and this gives advertisers all sorts of options to make the deals sweater as in the use of online coupons and rebates.

If you have an advertising degree or are just interested in advertising jobs, you might think seriously about trying to make money online. It is something that anyone can do and it involves making blogs about different things and getting paid by advertisers. The most common way to make money is to join various affiliate programs and try to sell those things to the people who read your blogs.

As an example, you can see the money I have made if you read this article on how I make money online.  Some of the money I make comes from the advertising budget of a site called CashCrate and they are willing to give me and others a small referral fee for every customer I bring them. They pay me that money rather spend money advertising themselves and it allows me to make a decent part time income. In addition to that website, there are thousands of other companies  that also have affiliate programs and will similarly pay you for every customer you send to them.

There are not a lot of jobs in high demand right now with the poor economy but the Internet is a place where you can carve out your own job if you know what you are doing. If you have the ability to write and you have some advertising knowledge, you should be able to work hard and start making money. It is something that requires little to no initial investment and the harder you work at it and the more creative you are, the more money you can potentially make!