What are the tax liabilities for personal small business internet sales?

Question

I'd like to sell my hand-made jewelry through an internet site through which one can sell hand-made items for a small fee. The site is similar to E-bay. I can't seem to find information concerning income tax (U.S.) regulations without dredging through IRS guidelines. Does one simply keep track of sales and file a 1099, or does the IRS even monitor this type of income? Any advice is greatly appreciated.

Would it be profitable and advantageous to get a tax id. number in order to purchase supplies required for my jewelry?

Answer 1

Honestly, it depends on two things. First, the website. If they send you 1099s for the sales you make via their site (they should be able to tell you whether or not they do), then you have to report the income.

Secondly, how serious are you about this? Is this going to be a significant source of income, or just an extention of a hobby. The reason I'm asking is this will effect the deductablity of losses. If this is simply a hobby, and there is no 1099, then don't even worry about reporting it. The IRS will never know.

However, if this is going to be serious, then I suggest that you get an EIN number, and keep track of your expenses. This will more than likely generate a decent loss, and that will lower your taxable income.

My suggestion is to discuss this with your CPA (NOT H&R BLOCK!!!!). If you are located in Kentucky, then I recomend my firm. We specialize in helping individuals who own small ventures such as this one. Hope this helps.

Answer 2

You don't need to get a tax id, particularly if your income is small. File a form 1099. The IRS is following e-bay sales more and more but it don't know to what extent. Basically you are adding your sales to your income and pay taxes sames always - too much!

Answer 3

The simplest way to do this would be as a sole proprietor and file Schedule C. You would pay income tax on the net profits as figured on Schedule C, subtracting your expenses.

Read the instructions to Schedule C. Or just keep track of your income and expenses and take that to a preparer.

Answer 4

the often common and in all probability superb way is once you checklist the sale, you in addition to mght make an get admission to for revenues tax payable to music the quantity due. you are able to place this quantity in it sluggish-honored account and on the tip of reporting era, deliver in the quantity owed. As for the reporting era, not sure of NJ regulations yet often reporting era (quarterly, semiannually or according to annum) relies upon on earnings. The extra earnings, the shorter the reporting era. Hopes this enables.

Answer 5

The above answer is right as far as it goes. Just remember that if you make enough money, you will have to file quarterly estimated income tax, which would include your self-employment tax.

Answer 6

Sounds right, if it is you can have a work space and office in your home and get a tax break for that. Talk to a CPA-what ever you pay them this year is deductible next year.

Answer 7

Check out one of the books in this tax blog maybe