Accounting and taxes – preparation will save your craft business money from the outset.
Getting your facts and figures right at the start will save you a lot of stress and heartache further down the line.
If you are registering your business I would recommend talking to an accountant or small business advisor to make sure you cover all of the bases from the outset. It is essential you know your liabilities as well as your opportunities for deductions!
Things you will need to consider as a registered business:
- Federal Taxes
- Income Tax
- Self-Employment tax
- State Taxes
- Income tax
- Sales Tax
- Online Internet Sales
- Craft show sales
- General sales
- County Taxes
- Personal Property tax for company assets – computers, office furniture, etc.
Think about scale, how big do you think you’ll be, what is your growth potential in the short, mid and long terms?
It might be a better option to start out as a hobby business initially to see how your business and sales grow. You can start out without registering your business (but still creating a business presence) and claim profit/loss on your regular tax return.
The IRS has some guidelines on how and what can be considered a Hobby Business – see here for more information. Intuit has some good resources on hobby businesses and what you can and cannot do – see here.
For a more Arts and Crafts focussed look at taxes review this article
Tax Considerations for Self-Employed Arts and Crafts Vendors
Without the proper support from an accountant, you may be missing important deductions, keep all documents and receipts to keep control of your accounting and taxes.
Use applications to track all of your expenses, supplies, and costs. See here for recommendations on craft business based applications and tools that can help you at tax time. Track your Cost Of Goods Sold (COGS) to keep an eye on your profit margins too!
