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Doing quite well selling items, what about tax info?

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ballmode

Lifer
So I've been selling items on the side as a hobby of mine. Basically wood working, custom. Been getting enough requests that I'm selling about 2 or 3 a week.

I've kept logs of all the money and transactions, when it comes tax time what do I need to do?

The payments have all come from paypal
 
ballmode said:
So I've been selling items on the side as a hobby of mine. Basically wood working, custom. Been getting enough requests that I'm selling about 2 or 3 a week.

I've kept logs of all the money and transactions, when it comes tax time what do I need to do?

The payments have all come from paypal
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what kind of woodworking?
 
That would be Sch. C my friend. Report all your business income on that schedule. Also, as importantly, keep track of all your expenses.
 
Xcobra said:
That would be Sch. C my friend. Report all your business income on that schedule. Also, as importantly, keep track of all your expenses.
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This, if he didn't set up a Corporation.

Ballmode, my question is are you collecting Sales Tax and submitting to the state? And in that vain, are you exempting yourself from paying sales tax on your material purchases?
 
Look into an LLC or Sole Proprietorship, check out the Dept of Revenue's site for their requirements.

Keep track of all expenses. At tax time, Schedule C is open to you which is both good and bad depending on the sitution.

Be very careful thinking anything you buy is now sales tax exempt. Self-employment is a big opener for audits. Most of the people I know that have ran their own businesses have been audited at least once when you look at things over a 10 year period.

Also keep in mind that although the IRS can only go back 7 years to find a problem, once one is identified it opens up another 7 years of going back. I'd keep all your records permanently.
 
CPA said:
This, if he didn't set up a Corporation.

Ballmode, my question is are you collecting Sales Tax and submitting to the state? And in that vain, are you exempting yourself from paying sales tax on your material purchases?
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I'd just throw it under other income. Too much hassle with a hobby on sch C usually. No SE tax and can take the expenses on Sch A.

How much in sales are we talking about?
 
I think once you start investigating it, you'll be pleasantly surprised by the things you can deduct as expenses.
 
BrunoPuntzJones said:
Brainfart, you're right, hobby isn't subject to SE.
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unless we would like to discuss fraud, 'hobbies' do not become selling items.

People try to make hobbies into businesses so they can write off everything, but there are no real sales attached to that nor 'doing quite well'.
 
CPA said:
Ballmode, my question is are you collecting Sales Tax and submitting to the state? And in that vain, are you exempting yourself from paying sales tax on your material purchases?
Click to expand...
SC requires that my bro, the plumber, charge sales tax on the parts/fittings/etc that he puts in someone's house.

3rd for pics.
 
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