Once Upon a Tax Season
Finally!! We filed our very first Schedule C!
Disclaimer: I no longer find procrastination funny, or fun. I once humored myself, "Haha, I am the world's best procrastinator, you can't procrastinate better than me." I was prideful about the amount of quality work I could accomplish at the latest possible moment. The past 48 hours have caused a great awakening, and I am no longer procrastinating (hopefully this post is not an act of avoidance, ha!)
It all began on Friday night, we crunched numbers, printed receipts, organized receipts, read tax laws, learned what a Schedule C is, learned what a 1099 K is (and realized we had one), calculated mileage for an entire year on three different cars, measured the square footage of certain areas in our home, consumed too much coffee, went to bed at 6:30 AM on Saturday, called our friends at Degno di Nota in a panic, missed church, had a few fights, and here we are, filed - submitted - finished - well, until April 15th, 2015. Officially we feel like a business, and we learned more than we thought possible, in a 48 hour period.
Now for a few humble tips, if you are an Etsy seller like us, that works out of your home, this may help you.
First question: Why didn't you all hire a CPA to help?
We should have, and we could have (as we know two people that would have surely helped). But because we waited until the latest moment, and didn't want to file an extension, we had to take the wild route. Our recommendation is, if you don't have knowledgeable friends or family, and you don't like spreadsheets and numbers, find someone to help you. It wasn't all that scary, especially with Turbo Tax, but it can be overwhelming to simply rely only on Google to answer your questions.
Second Question: Did you save all of your receipts?
Yes, we did, in theory.
We use Amazon and other online suppliers for most of our supplies. And you know how it is, click to purchase, the email sits in the inbox, you think, "hmmm, I should print this", but you never do. Well, this really made things difficult. We had to go back and print each and every receipt. Having the hardcopy made totaling expenses easier in the end. And if it happens, the scary five-letter word - AUDIT - at least it's all in one file now.
Third Question: How did you organize everything?
This took a while to figure out. Once you enter Turbo Tax you'll see, there are several areas to enter in numbers, and knowing which numbers to enter is confusing. We categorized into six groups: 1. Packaging Supplies (Boxes, Bubble Wrap, etc.) 2. Materials/Supplies (Consumables) to make products (Wood, Nails, Glue - etc.) 3. Miscellaneous non-consumables needed for business (Router Bits - Paper Shredder - etc.) 4. Assets - larger purchases on shop and office equipment (Band Saw - Computer - etc.) 5. Shipping Costs/Customer Refunds 6. Marketing/Advertising (Business Cards etc.)
Fourth Question - What will you do differently now/for next year?
•Starting now, or at least before May, we will categorize expenses as well as track them in our newly created, awesome spreadsheet.
(I love spreadsheets.).
{Template will be available soon - if you'd like the template to track your expenses just send us a message through Etsy or email us, and we can surely send it to you.}
•Once February 2015 arrives, we will meet with a CPA, and discuss our Schedule C from 2013, and begin filing for 2014.
•We will print all online purchase receipts immediately after making an online purchase, and file these receipts monthly or bi-monthly.
•We will use information from last year to support our purchasing decisions and budget guidelines for the remainder of this year.
Despite the headache, we love being our own boss. Thank you for reading! Hurd&Honey P.S. About two hours after publishing this post we were told that we now must begin to file quarterly taxes!!! Deep breathing, and much prayer. I don't know why all of this exhausts me so much. :)