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Starting an online-based work from home business can seem like a glamorous affair to some people, however while your life may become a little easier when you start an online venture, it doesn’t mean you can’t excape the usual business affairs like handling your tax.

No matter where in the world you live (apart from a few special countries like Brunei) you will be required to pay tax and that means making sure the government knows what you’re earning and being honset about it.

You see, when you run your own internet based business — especially programs like affiliate marketing where funds are generally paid direct into your account — it’s extremely easy to avoid having to pay tax as it’s not recorded in many cases.

In more than 7 years of myself doing business online, I’ve met a swag of poeople — a lot of them affiliate marketers — who pride themselves on the fact that they’re not paying any tax, which can be an extremely dangerous practice if you’re not careful.

The dangerous part is that if caught for the offense of tax evasion, you could be severely punished, which could include you being sent to prison for up to 25 years in some countries.

It’s becasue of this that declaring your tax and paying it on time is extremely important. Sure you may be short of between 8%-60% of your money (depending on where in the world you live), though just ask yourself if the penalty of losing your freedom is really worth those extra dollars.

The great thing is that you can reduce your tax in most nations by doing things like claiming more back, making sure you have a great accountant doing your tax or even moving to a lower-taxed country, which is even something I’ve done personally. While this may seem like a big step, I’d still rather do this than try and break the law.

In the end the choice is yours, however if you are caught for tax evasion when running your own home-based operation, don’t say I didn’t warn you!