Tax season is here! IRS has extended the tax filing deadline to April 18th this year – that’s 3 whole extra days. So, it’s time to suck it up and get your paperwork ready to file your taxes.Â Although your accountant or tax preparer won’t need all of your paperwork, (s)he will need your total business expenses and income for your Etsy shop.Â Your Etsy business is considered a home business and therefore, you enjoy some special tax benefits.Â You can save yourself a nice little wade of cash by understanding how to take advantage of your special situation.Â I’m only going to offer one important tip in this post, so pay attention here it goes:
TIP #1 KNOW YOUR DEDUCTIONS
This doesn’t require you become a tax expert, but it does require you to become an informed tax payer. As a home business/small business owner the IRS treats you differently.Â According to , “Rich Dad, Poor Dad” by Robert T. Kiyosaki, you are among a unique group on the “cash flow quadrant” and there are many deductions you can take advantage of. For instance, the ink you buy for your printer and the packaging you buy for shipping are all considered business expense therefore, they are tax deductible.
According to IRS, “To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.”
IRS code is a bit intimidating and overwhelming. I mean do they speak English?Â But, this doesn’t give you an excuse not to be an educated tax payer.Â To help you get started, here’s a list of deductions you may be able to take:
1. Purchase of Business cards/stationary
2. Office furniture
3. Office supplies
5. Professional services and consultants
6. A portion of utilities
7.Â Phone, internet service and web-related expenses (i.e webhosting)
9. Business Travel (i.e.cost of attending craftshows)
10 Use of auto for business
11. Business insurance premiums
12. Legal expenses
13. Etsy shop expense
There are a number of additional deductions that may apply, these are just a few.Â To help you learn more, the IRS has a Virtual Workshop, that I highly recommend.Â I know, you’d rather have your teeth pulled than have to sit through a boring IRS workshop.Â But don’t fret, to ease your pain I sat through the entire workshop and kept track of lessons that would be of most benefit to you (I think I deserve to be added to your Etsy Circle for this one).Â The following lessons get straight to the point:
Lesson 4 of the IRS Virtual Workshop provides additional information on “What you need to know when you run your business out of your home“.
Lesson 1 covers ” What you need to about federal taxes and your business”
To checkout the Virtual Workshop, just click the image below.
Good Luck! and May the Force Be With You!