Diane ~

If you are a Sole Proprietor, be certain to set aside at least 30% of your gross for Federal taxes.

Social Security as a business owner will account for 15% as well. As an employee, 7.5% is withheld with the Employer matching it's own 7.5% to add up to the total of 15% until you "Pay out" at a certain level.

Take it from one who has wrangled, both successfully and [/b]unsuccessfully[/b] at times with income earned from online ventures.

Is it a hobby??? A second income/occupation??? Are you taking too many of the expenses allowed??? Or none,as I have in the past???

What I found was if you danced to close to the line with deducting percentage of Home Office use. Our IRS guy took an extremely hard stance, and very, very close review of past returns!!!

In '98 I was presented with an additional tax bill of over 5 grand!!! A combination of "Taxes Owed", "Interest and Penalties" and being a tad too aggressive on what I considered claimable income.

Try explaining to an IRS guy your internet ventures are "Educational Expenses" related to my real world selling career!!! LOL

If I go back to school or take a class to further my sales profession, it's expensable. If I go to a Selling Seminar, it's expensable. But to experiment with people's minds, what triggers their purchasing motives, and overall testing of words and phrases which sell... At least on the Internet he didn't consider all of it expensable.

So overall... Allocate your portion for taxes, set a portion aside in an investment vehicle of your choosing and place the rest back into your business.

The exact figures should be left up to you. But remember, Uncle Sam sometimes won't play fair and if he feels you are cheating him he can make your life miserable!!! And if he believes there is fraud involved... You have just opened yourself up to some insidious scrutiny!!! As an aside... Don't piss off your IRS guy either!!! HA!

Success and Regards... Mike