Thinking about opening an Etsy shop along with your blog? Or even separate from that, for that matter. Well, don’t think you’ll get away from the government wanting their share! Etsy is a small business and as such, it provides income. Income=income taxes!
I know taxes evoke fear in the hearts of the strongest of men (and women) but it doesn’t have to be a scary thing.The first thing you need to do is to be sure you keep good records. The most basic way would be an old fashioned ledger. Track what you spend on your materials, as well as how much you make per item. An Excel Spreadsheet would do the same thing, just higher tech. From there you could try any number of financial apps or websites. Since I’m just starting my shop, I’ve been looking into this. I came across a site that looks interesting and I plan to check into it more. It’s Craftybase. Worth checking into. No, that’s not an affiliate link. It’s just a suggestion. No money being made right there!
The following is just information that I’ve learned. I don’t guarantee it. I’m not a financial professional in any way. The main thing I’ve seen in my research is just about everyone suggests you find an accountant to handle your taxes. This is one place you don’t want to cut corners, especially if your shop is making some serious money.
The Nitty Gritty
First off there are Federal Income Taxes. You know about those! Your Etsy income is considered ‘self-employment income’ and therefor you will need to file a Schedule C: Profit or Loss From Business. You may also be subject to self-employment tax and required to file a Schedule SE Self Employment Tax. Don’t let all that scare you. The IRS website is very user friendly. Just as your employer pays your taxes throughout the year, you will also need to do this. Check out Estimated Taxes on the IRS website for more information and help with keeping your small business tax-legal with the fed. Also, there is great advice in the seller handbook on Etsy. That’s been a great help to me so far. State income tax and the rules and requirements vary by state so check your state department of taxation for your specific area.
You’ll also need to deal with sales tax, of course. Generally, you need to collect sales tax from buyers who live in the state where you have a presence. For example, I live in Ohio. I will need to collect sales tax from any buyers who live in Ohio. For more information on this, you could check out Sales Tax Institute. Also, another good place to find sales tax info specific to Etsy is the Etsy sellers handbook. I can’t say enough about that. There’s a lot of information there.
I didn’t delve into a lot here but I hope I helped you out some! Remember, I’m not a financial professional so I don’t want to steer you wrong! None of the links on here are sponsored or affiliate links. I received no payment for any of them.
I would love to hear from you! I’m planning to talk about disclosures on your blog as my next topic. Please give suggestions on what else you’d like me to cover!
The next few days will be spent crafting new items for my shop as well as a baseball game on Saturday! Yay summer! I’ll be back on Sunday! Happy weekend everyone!