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On the subject of taxes and trimming the fat.

Discussion in 'PUBLIC Vintage Chatter - Anything and everything' started by hatfeathers, Jan 15, 2005.

  1. hatfeathers

    hatfeathers VFG Member

    Since the majority of you guys are probably pros at this resale thing by now, or live outside the US, please tolerate my short remark here.

    My hubby is an accountant, so he treats my ebay thing as a business. This means I pay taxes on what I make in a year.

    This also means he has me track my mileage when I'm going to the PO, Gsales and auctions. The amount of credit the US government gives for mileage is more than worth it...even offsets what I have to pay out. Honestly, it's a lot of money for tooling around!

    I also keep track of expenses (tape to paper to new mannis or a camera). This goes toward credit on my taxes as a cost of doing business.

    Anyway, since there is much talk about trimming the fat to afford the new gallery fees and such, I wanted to throw that out for you to chew on.

    I don't know what the rest of you do in profit, but I think if you make more than $500 a year you have to claim it on your taxes. If you do have to go through that, why not take them up on whatever they'll give in return.

    I can have him elaborate if you need..I'm the artist, not the accountant.

    I had to sleep with him for this info, so I thought I'd share it with you for free.:wub:
    Jenn
     
  2. alonesolo

    alonesolo Guest

    I hate to ask this but do we have to do anything for more info??:BAGUSE:
     
  3. Vintagetrend

    Vintagetrend Registered Guest

    Oh yes, taxes!!
    So many things are legal write-offs
    Whether you own or not a part of the morgage or rent can be written off depending on how much of your house is used JUST for ebay/website.
    mileage as you mentioned above OR if it is more you can write off partial car payments/repairs, you just cannot do both
    Your ebay fees can be written off if you use them in your final income
    listing programs
    website fees
    any "free shipping" you give repeat customers
    business cards
    any shipping that goes over what the buyer paid
    packing expenses
    buying trips including hotel, rental car, food, transport just about ANYTHING on a buying trip

    and the list goes on!

    :)

    Love it

    Michelle
     
  4. fuzzylizzie

    fuzzylizzie Alumni

    I'd love more information. This is the first year I've officially been a "business" and I can use all the advice I can get, even though an accountant will be doing my taxes. I certainly don't want to overlook anything!

    Lizzie
     
  5. dibs2002

    dibs2002 Registered Guest

    I'm sure your mall fees can be written off too. I know that I claim for web hosting fees for myself. And Lizzie, that new house of yours is probably a biz expense too, along with all of it's expenses.

    Then you pay tax on any profit if there is any after all the expenses have been taken out.

    It's great.

    Deb
     
  6. fuzzylizzie

    fuzzylizzie Alumni

    Ha! After deducting the house, the IRS will owe ME money!;)

    Lizzie
     
  7. Also, don't forget to itemize whatever you have donated to charities like the Salvation Army.
    You can get the write-off list from H&R Block and that will tell you how much you can claim for each piece. Did you know if you donate an evening dress you can write off up to $60, foundation garments up to $8 and shoes up to $25. That's really good for all those poly maxi dresses you may need to eliminate!

    You can also write off VFG fee's too. :licky:

    Tiff
     
  8. cosmiccowgirl

    cosmiccowgirl Alumni

    Redonated ebay dogs can be written off. Business related publications and training can be written off. If you have a storage locker for your ebay inventory, that can be written off. Mileage write offs are great. I run most of my personal errands on the way to and from business related trips, which basically makes them free.
     
  9. hatfeathers

    hatfeathers VFG Member

    I hate to ask this but do we have to do anything for more info??
    He rolled his eyes at me...don't know what that means!

    More things to keep track of:
    all fees (as mentioned) paypal, ebay, mall

    books about your craft-would Vogue mags count? Probably, market research!

    New computer equiptment

    New desk chair, new desk!

    Tape, boxes and tissue paper

    Totes or trash bags (organizational tools)

    One of those plastic dealies that keeps your carpet from getting mashed by the new desk chair

    Padded hangers

    Distilled water for your steamer

    Laundry soap, bleach, vinegar

    Pens

    Postal scale

    CDs for backing up your drive

    Rechargable batteries for the camera

    and any other thing you buy for your business!


    Keep in mind, you will have to be paying taxes to claim these things. Keep the records from year to year in case you get audited. They'll want proof.

    It doesn't have to be fancy, I write my mileage on a notepad and add it up at the end of each page.
    Keep the store receipt and circle the items you bought for "the office".

    If you go to an accountant, they can take your info and plug it in to the right places for you.

    The mostest importantest thing is to keep track of how much you bought an item for. We all know when you sell a dress for $50 that doesn't mean you made $50 profit.

    These tidbits may not help much for the approaching tax season, but there's no reason not to start right away for next year. I'm pretty sure they'll collect taxes again next year. . . I think I'll go ask hubby.:love:

    Jenn
     
  10. dibs2002

    dibs2002 Registered Guest

    Awesome advice! This is a great thread - should we move it to online tools?!

    Deb
     
  11. I am a tax preparer and own my own business. We do the same thing as H & R Block with the quick refund checks (but we think we do it better.:D ) .

    Yes, keep up with all of your expenses. You will file a Schedule C with your own personal return. There you will list your total income and expenses and all of the ones mentioned above can be used. You can use mileage or you can depreciate your vehicle and take actual costs such as new tires, gas, repairs, etc. Just have to work out which one is the best for you.

    As for business use of your home that is on a different form. Be sure to know the total square footage of your home and the square footage of the area you use for a home office. That is how they get the business percentage. You can then let them know about home mortgage interest, property taxes, major repairs, utilities, phone, home insurance, etc. They will take a percentage of those costs. However, keep in mind if you use your mortgage interest and property taxes, this may take away from those amounts if you itemize on Schedule A.

    Confusing, huh? However, everyone should own their own small business. It really does reduce taxable income, especially in a two income household.
     
  12. marlyandmorry

    marlyandmorry Registered Guest

    We have sort of a mini cardboard filing cabinet and this is where we keep all our receipts!!! One of these boxes is used striclty for the Post Office, month by month, and then the other one is used for everything else.

    Retaining every single miniscule receipt is the key...It used to be a few years ago that our SA did not even have receipts. Now they have become so commercialized that they certainly do....

    Now its pretty hard to get some sort of handle on garage and yard sales, this is the part that is the most time consuming for us.
    Since this is all cash money, it has to be accounted for, every single penny.

    We take X amount from the bank machine and whoo hoo a receipt comes spitting out!!!
    :saint:

    Get yourself a clip board which should be legal size. (those darn ads can be so LONG!!)

    You clip all the newspaper garage sale ads that you will be going to and tape them on a separate piece of paper for easy reference....

    Then underneath you have yourself a pad of lined paper...For each garage sale, you write down the date, address, what you bought and how much was spent, item by item.....

    Oh yes and ain't this such a very big pain in your ass!!! :mad:

    But this is what makes the taxman happy...Otherwise you can't account for the cash flow spent on the weekends....Believe you me there are certain periods of the year where yard and garage sales are very lucrative for us (about 3-4 months of the year) We literally spend hundreds and hundreds of dollars...

    After you are all done for the weekend, you balance out your cash against the list and then file the whole works away as one big receipt.

    We just take the whole works into the house when we are done and leave the clip board in the car with the pad of lined paper. Why???

    Well sometimes there is the odd sale which is during the week, in the evening, and if we leave the clip board in the car then we are not running around the house looking for it at the last minute...

    Not doing the record thing for Revenue Canada would mean that we would have to kiss all that cash goodbye when in fact it is actually stock inventory!!!

    Our tax laws here in Canada might be different but its the logic which is still the same....

    Yes I think Online Tools would be purrfect Deb!!

    Nanc
     
  13. crinolinegirl

    crinolinegirl Alumni

    Even though I'm in the UK, book keeping is pretty much the same thing although when you start making profits over something like £4500+ (not sure of the exact number) then you have to start paying tax on that.

    I'm a dud when it comes to math and adding but I got myself a ledger book with all the columns in it and enter in all the info as I go along for each month and then tally up everything when it's the end of the tax year. If you enter in everythihg as you go along, doing your taxes at the end of the year isn't so bad. I do it myself and this is the girl that failed math repeatedly at school! :)

    Anything that you require to run your business is "overhead" so go right ahead and enter in all those garage sale purchases, website hosting fees, ebay fees, bank fees, packing material and get receipts for everything. If you can't get a receipt (like at a garage sale or flea market) then just mark the date, location, items you bought and the price so you have that as a reference. It also helps to file your recepits and invoices by month as well incase you need to go back and refer to one, you don't have to sort through a shoe box full of paper! :)

    Lei
     
  14. cosmiccowgirl

    cosmiccowgirl Alumni

    Oh, and another important thing. If you have receipts from a store that uses a thermal printer, make sure to take a Xerox of them quickly and keep that in your records. Those things fade and become illegible in no time!
     
  15. Catboxvintage

    Catboxvintage Registered Guest

    I've been claiming my eBay sales for 3 years now and I try to keep it pretty simple. I have one big plastiic container with a lid and I throw all my receipts for expenses in that box.

    At the end of the year, or before April, I go through all of the receipts and separate them into categories. Stock, supplies, donations, and intangibles like cable modem and mileage. I then write down and add up all of my fees: eBay, Paypal, Vendio, etc. I had an accountant do my taxes the first time, then I just used that year's taxes as a guide for the next year so that I didn't forget anything.

    But I do have a bookkeeping background so I find doing taxes pretty simple. If you have any questions at all, hiring an accountant is more than worth it.

    Basically, keep a receipt for absolutely everything that might have anything to do with your business because you can write off nearly everything you can think of. :USETHUMBUP:
     
  16. pastperfect2

    pastperfect2 Alumni +

    A note from my accountant, who used to work for the Sate of KY . When you itemize your expenses, be specific in your categories. Avoid a catch all category like Misc Expenses. If that has too much in it, it can be a red flag to auditors.

    Hollis
     
  17. fuzzylizzie

    fuzzylizzie Alumni

    This thread is great! Thanks for starting it, Jenn.

    A few questions. How about:

    Magazine subscriptions - such as Vogue.

    Museum admissions to fashion exhibits

    Internet service

    L
     
  18. Patentleathershoes

    Patentleathershoes VFG Veteran VFG Past President

    I do have a question. it doesn't pertain to this past year. I never had any start up money or seed money. My dad is going to give me a chunk of money to be able to get myself better established with advertising, a manni, storage etc, right off the bat.

    My husband might know as he had ran a business, but what do you claim this as? or any of your own money that you invest into the business before you make enough to be able to put the money right back into the business? does that make any sense?
     
  19. dibs2002

    dibs2002 Registered Guest

    Not sure, that's why I have an accountant! I am practically form-phobic, and although I used to do our personal taxes myself, never again!

    When I started my incorporation, I was able to claim the costs of books, furniture, computers and anything else I was using from the house in my business (prices estimated within reason).

    I guess you'd have to claim it as investor money, but I've never had any investors so I wouldn't know. Wow Chris - you have investors ...

    Deb:wow:
     
  20. Chris, if it is a MAJOR expense and it is your first schedule C, I think they want you to spread it out over five years. However, your costs will probably be minimal , so I would just put mannequin under office supplies, clothing, etc, under inventory. You probably want to use the accrual method since you will bring inventory over from year to year.

    Yes, you can take your subscriptions to Vogue, etc, and your internet fees or portion thereof only used for business. Museum exhibits, too.

    I really like to put expenses in the categories they have but if you must, you can use "Other" and be specific, such as subscriptions and the amount.

    I will get a listing of the categories for you.
     

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