The Lowdown on Taxes for Etsy Sellers
Post on 19-May-2015
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DESCRIPTIONThis slide deck is from an educational seminar series that Etsy and Outright hosted for Etsy sellers throughout the United States. The focus is on helping Etsy sellers prepare for the 2012 income tax filing.
- 1. The Lowdown on Taxesfor Etsy Sellers
2. Agenda Quick Overview of Annual Taxes Important Form: Your 1099-K Minimizing your Taxes Expenses & Costs of Goods Sold Deductions: Common deductions taken by Etsysellers Automating your work with Outright Dealing with sales tax (time allowing)For the purposes of this presentation, we are assuming you are a sole proprietor or LLC 3. Disclaimer (Our lawyers made us do it) This publication is designed to provide general information regarding the subjectmatter covered. It is not intended to serve as legal, tax, or other financial advice relatedto individual situations. Because each individuals legal, tax, and financial situation isdifferent, specific advice should be tailored to the particular circumstances. For thisreason, you are advised to consult with your own attorney, CPA, and/or other advisorregarding your specific situation. The information and all accompanying material are for your use and convenience only.We have taken reasonable precautions in the preparation of this material and believethat the information presented in this material is accurate as of the date it was written.However, we will assume no responsibility for any errors or omissions. We specificallydisclaim any liability resulting from the use or application of the information containedin this material. To ensure compliance with requirements imposed by the IRS, we inform you that anyUS federal tax advice contained in this communication (including any attachments) isnot intended or written to be used, and it cannot be used for the purpose of (i) avoidingpenalties under the Internal Revenue Code or (ii) promoting, marketing, orrecommending to another party any transaction or matter addressed herein. Alwaysseek advice based on your particular circumstances from an independent advisor. 4. Filing your annual income tax returnIncome Tax Filing is due April 15, 2013 (If you file for a tax extension, your tax filing is due 10/15/13) 5. Paying your income taxesEstimated Taxes = 1/4th of your annual income taxDue Dates: Jan 15, 2013 Apr 15, 2013 June 17, 2013 Sept 16, 2013Quarterly estimated taxes are justyour annual income taxes paid quarterly. 6. ProfitProfit = Revenue - Expenses You pay tax on this 7. ProfitProfit = Revenue - Expenses Revenue includes ALL sales and other income! 8. Revenue: Form 1099-KThe 1099-K is a form that PayPal and Etsy sendto you and to the IRS to report your revenue 9. Who will receive a 1099-K PayPal and Etsy will send 1099-Ks between 1/25/13and 1/31/13 You will get one if your 2012 PayPal or Etsy DirectCheckout sales met or exceeded: $20,000 or more in sales AND 200 or more items soldNotes: Etsy and PayPal calculate this independently The limits are based on the total of all of your accounts through one provider 10. All of these are included in the 1099-K total! Shipping revenue Sales tax collected Fraudulent payments received Sales that were returned 11. How to handle the 1099-K Reconcile makesure its right Expenses loweryour taxes Deductionslower your taxes Double Checkyour gross receiptsREDD It! 12. REDD ReconcileCarol Brady 13. Reminder. ProfitProfit = Revenue - Expenses Now, well talk about this 14. REDD Expenses 15. REDD Cost of Goods SoldThings that go intomaking the items yousell 16. REDDDeductions Make sure that you are taking all of thenon-cash deductions you canLets talk about common deductions for Etsy sellers 17. REDD Home Office Deduction Write off a percentage of your mortgage payment or rent and utilities Follow the IRS rules, likeexclusively andregularly Take a picture of yourhome office 18. REDD Contribute to Retirement Retirement plans arent just for bigcompany employees Individual 401(K) SEP IRA Both allow you to defer your profits (andtaxes) until retirement 19. REDDMileage Tracking Mileage: Download Mile Bug or Outright for your smart phone Track your odometer at the start and end of business trips and start and end of the year Choose one deduction: $0.55+1/2 cents per mile driven for businessOR (not and) Actual vehicle expenses (gas, maintenance, repairs), based on percentage of annual mileage used for business 20. REDD Double Check Double check that amount on Schedule C Line 1 matches or exceeds your 1099-K reported sales (Box 1) 21. Automating your work with OutrightOutright is Etsys preferred bookkeeping tool. It helps you see how you are doing and get ready for taxes. Link your Import and See howImport Prepare businesscategorizeyoure income your taxes accounts expenses doing Sign Up at Outright.com 22. Link Your Etsy Account Secure, Read-only connection Outright imports and organizes your transactions Repeat this process for all your business accounts(PayPal, credit card, bank, etc.) 23. Import Your Business IncomeXYZ Sellers $51,453.4201/03/2012 Steven Aldrich01/01/2012 Steven Aldrich01/01/2012 Mike Henderson01/01/2012 Mike Henderson 24. View Income DetailXYZ Sellers $51,453.4201/03/2012 Steven Aldrich Steven Aldrich Steven Aldrich01/01/2012 Steven Aldrich Mike Henderson Mike Henderson01/01/2012 Mike Henderson01/01/2012 Mike Henderson 25. Import Your Business Expenses XYZ Sellers $51,453.42PayPal PayPal FeesPayPal PayPal FeesUSPS Shipping $5.65Etsy Etsy FeesPayPal PayPal FeesEtsy Etsy FeesEtsy Etsy Fees 26. Slot into IRS-Approved Expense CategoriesXYZ Sellers $51,453.42XYZ $51,453.42SellersEtsy Fees USPS$5.65 Etsy PayPal PayPal Fees Etsy Etsy Fees 27. Get an Overview of Biz Performance XYZXYZ Sellers Sellers $51,453.42$51,453.42$59,418.25$51,453.42$8,434.21 Etsy Account 28. Review your Profit and Loss XYZ Sellers $51,453.42 29. Analyze Spending Categories XYZ Sellers XYZ Sellers $51,453.42$51,453.42Cost of Goods Sold $3,512.47Etsy Fees $1,522.49 30. Review Schedule C Worksheet XYZ Sellers $51,453.42 $508.38 31. Pay Your (Quarterly) Taxes XYZ Sellers $51,453.42 XYZ Sellers$51,453.42 $4,423.271,911.659,873.972,433.564,423.27 32. Get Outright on the iPhoneOutright Mobile.Available for iPhone! 33. Managing your sales tax obligation 34. Sales TaxNexus: Where do you have a physical location? Your house or office Selling at out-of-state craft shows Employee Locations (or helpers) Suppliers, in some unique circumstancesInvestigate and Register: For your state(s), find out: Requirements Rates Exempt Items How to Register http://outright.com/blog/sales-tax-resources-for-online-sellers-in-every-state/ 35. Collect and RemitCollection is the easy part:http://www.etsy.com/help Track and Remit Payment: