Sunday, October 26, 2014
Taxes and TPT: Part 1
Disclaimer: First things first, I am not an accountant. I didn't go to school for accounting or business. I am not affiliated with any accountants, H&R block or any other tax firms. I am writing this reference guide for just that, a reference guide. I am a small business owner who is sharing knowledge from my experience and conversations with my accountant. These are all things that I have worked with my personal business accountant on. I am not responsible and will not be held responsible if you get audited. Please keep that in mind while reading and if you leave any comments, be nice. If you have any further questions about something, you can refer to the official IRS code here. Thanks :)
(can you imagine!?) So why are you paying someone to do your taxes who pretty much only knows the basics of what you can and cannot do and claim as a small business owner? Exactly. Go to someone who went to school for accounting, someone who knows the ins and outs of taxes.
So please, right now, go find an accountant. Google your heart out and find the right person for you. I suggest finding someone who has a small tax firm. I've used the same woman since I was 16 and my parents have used her for over 20+ years. Not only is she awesome at what she does, but she straight up tells me what I can and cannot do. No sugar coating, no beating around the bush. She knows her ish!
PSST! If you want to get your taxes done by an accountant this coming tax season, start researching and scheduling NOW! Otherwise you won't get in and you're stuck overpaying H&R block to put something where it doesn't belong, if you catch my drift.
Since my husband and I each run our own businesses, we keep folders for each of our own receipts. Then at the end of the year, we sit down and organize them better, that way when our accountant appointment comes up in February, all we have to do is show her numbers we've already calculated and a stack (or folder) full of receipts.
But seriously though, keep your receipts.
My first year on TpT, I made less than $1,000 and I claimed it. The next year, I think it was around $6,000 and I claimed it. You don't need to get a piece of paper or an e-mail from TpT telling you anything (but if you make $20,000 or more, TpT will 1099 you). Even if you make $19,999 you need to claim it. Legally, by law... you need to claim the money you earned.
And if you don't get a 1099 form, you need to keep track of it all by yourself. Luckily, TpT keeps track by year of what we make and shows it on our dashboard. Plus, you can always click on "See Your Sales & Transaction Details" --> "Check My Sales" --> and then filter the start date and end date to span the entire 2014 year. Don't forget that you want to use the Total Sales, not the Total Earnings.
(who knew how amazing the back to school rush was going to be?! certainly not me!) and it's definitely going to probably bite me in the you know what at tax time.
My suggestion is to have your job take extra money out each month before you even see your check. Have it deducted and then when taxes come around, you don't have as much to worry about. The worst that can happen is that the IRS owes you money, and hey... you get your money back anyway!
If you're doing TpT full time or you don't want to go through the hassle of changing your paperwork at HR, then take 30% of your TpT earnings every month and set them aside in a savings account. If you end up owing the IRS money, you already have money set aside to pay up. If you don't, then go on a shopping spree and enjoy!
If you know you're making too much money (what a problem to have!), open up an IRA. This goes above and beyond your 401k and 403b contributions, but it's a great way to stash some money away that is not taxable.
TIP: If you get your taxes done and filed early (sans April), and owe some money into the IRS, you have until the last tax day to spend more money. This doesn't mean go buy a new car (because that's not a write off unless you wrap it in an advertisement for your store, but who wants to do that), but it means that you can go buy that new computer you need for TpT. You'll need to refile your taxes, but if it saves you a couple of hundred or thousand dollars that you would be paying into the IRS, it's worth it.
So instead of publishing it on this blog, I created an 11-page document, which you can grab here. The document covers everything from the Vegas Conference, blogger meetups, mileage, house expenses, blog expenses, clip art... you name it, I probably covered it.
If you find that there's a question you still have about your taxes, feel free to leave a comment or email me personally. I don't promise to have the answer (again, I'm not an accountant), but I will do my best to help you. I'm a person just like you, and I like to keep as much of my hard earned money in my pocket. I mean, my clip art addiction isn't cheap, people!
Until Taxes and TpT: Part 2, I hope this has helped you out at least a little bit. If it has, leave some love. If it hasn't, what questions do you still have?