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| 15 Quart Pyrex Bowl by beppiebags |
These questions matter, especially at tax time. Unless you're trying to keep your business under the table and operate on a cash only basis (Which I highly discourage), you'll need to keep records. Keep in mind that Paypal will report their records if you're audited.
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| 1970s Hummingbirds Dress by PersonalPursuits |
The first question is hobby or business? It's an important distinction. If you are planning on calling your Etsy shop a hobby, read up on the restrictions. Let's assume for the sake of this discussion that you're a business.
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| The Skin of Our Teeth offered by TheOldBarnDoor |
Are you keeping track of your expenses? Are you keeping records? Here's a few of things I keep track of:
A. Receipts from thrift stores, estate sales, etc.
B. Mileage to estates, thrift stores, etc.
C. Excel Spreadsheets of what it is, what it cost, where I got it, what it sold for, and any shipping losses.
D. Excel Spreadsheets of all my consignment sales.
E. Costs of business insurance.
That's all I worry about. I could get into deducting costs associated with my home office, but I've heard those kind of gray area deductions can trigger further investigations.
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| Vintage Wall Mirror by moxiethrift |
Some ways in which I practice sound business management:
I keep a separate bank account for my business. It's a business account, not a personal one.
I keep records about each consignment client and keep them up to date on their sales for their own tax records.
I keep detailed inventory lists to stay organized, to know who owns what and in order to find things quickly once they've sold.
I keep track of all my in state customers for sales tax. Check with your state and see what your requirements are.
I keep track of the rules surrounding Self Employment tax & Social Security and pay accordingly.
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| Victorian German Silver Purse by justbecauseshecan |
While I'd prefer to just focus on finding the next cool item, I've found that taking a little time each day to maintain records saves me a lot of wailing and gnashing later on. Now while this is what I do, please know I'm not a tax expert, I don't claim to be and I'm just sharing my personal experience.
