I walked into my accountant's office and handed her all my information for my taxes. I received a modest return last year and hoped to do that same again this year. After all the information was calculated, she said the 3 little words no one wants to hear:
You owe taxes.
Keep your expenses separated by type
All the clip art, fonts, planners, business cards, and pens you buy to help run your business applies here. Save every receipt too. Even is it's just for $1, those dollars add up in the long run. I think I spent about $5 each month at the Dollar Tree for my store (mostly pens and post its) and at the end of the year, I spent roughly $60 there for my store.
Gift cards, product donations, Donors-choose. If you host a giveaway and spend money on gift cards, it goes here. Donated money to Donors-choose or GoFundMe? That's goes here also. Donated a product to your giveaway or another giveaway? That goes here too.
If you buy your own health insurance, save the receipts or go to your health insurance for the annual payment history. If you buy it at the Marketplace, they will send you a form in the mail to help with insurance.
Social Media Expense
Use buffer, tailwind, link in profile? These come with a month/yearly fee. These are a business expense too! This also included board booster, linktree, HP instant ink (earn a free month here), and more!
- Cellphone - If you use your phone for your business (ex Instagram, periscope, etc), it may be tax deductible. Gives you an excuse to buy a new phone!
- Work Space - Get the square feet of your home AND your work space. This may also be tax-deductible.
Type of those Expenses in Microsoft Excel
Add to your Savings!
Remember starting your first savings account when you were younger? Now's the time to put the savings account to good use.
My accountant asked if I had any money in my savings account. I said no. (Let's face it. TPT is my sole source of income. I need every penny!). She recommended saving at least 28% of my earnings each month and place it in my savings account. Do so if you can. At the end of the year, if you owe taxes, you can use those savings to pay for it. Hopefully you save enough and can have some left over. =)
Paying for Quarterly Taxes
TPT does not charge sales tax. That doesn't mean you shouldn't! My accountant suggested that if I projected to make the roughly the same amount next year, I pay quarterly taxes of about $500 to cover sales tax. She set it up so that all I have to do is pay it 4 times a year, printing out sheets to send to IRS. You can also pay online for quicker access. Quarterly taxes are paid every 3 months (April, June, September, January).
If worse comes to worse and I don't earn more money, I'll definite get that back. If I make more, it won't be as bad as it was this year! You may want to consult your accountant whether or not you need to pay quarterly taxes (I highly recommend it) and determine how much you may need to pay. Better to be safe than sorry!
Small Business Fees
Some states (and even some cities) have small business fees. Check your local and state department of revenue for more information. Although you have to pay it, it can be tax deductible for your federal taxes.
I hope these tips can help you in the coming year. Remember to save every receipt, keep track of your spending, and make products that will benefit teachers everywhere!
Disclaimer: I am not a tax accountant. I do not have a degree in business. This is just advice. Take it or leave it. =)