Small Business Notes and Printable Tax Season

If you have any questions do not hesitate to contact me at intentionallyinspired@gmail.com. 

Have a great day and be intentional..  

Here are some notes from the scope.  

Kristin Zolkowski

http://intentionallyinspired.blogspot.com/

intentionallyinspired@gmail.com

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I live in Wisconsin, Wife mom of 4 2 adults 2 teens that think they are adults. I have been in business since 1996, Moving business, Sign Business (4-6 employees) Bookkeeping, concierge, in home daycare center, cleaning, desktop publishing, logo design. Moved in June to a small farmhouse. I just cut off the last of my clients letting them know I would not be doing their taxes this upcoming season. I am not up to keep up with the ever changing laws J Except for whoomyself.. 

Approaching this as though you know nothing. Sorry if some of this sounds very basic but believe it or not some people are not fully aware of the most basic IRS rules and since the laws are changing from year to year tax preparers are now required to obtain a certified license for preparing taxes in an office.

When you decide that your blog or other business is ready to become more than a hobby per the IRS, there are a few things you need to consider;

Business Structures, DBA, yes

Business or hobby ??

The IRS will not allow tax deductions if your business, be it blogging or any other business is categorized as a hobby. To claim your deductions, you must first show the IRS that you are running a legitimate business that is generating a profit 3 out of 5 of the most recent years. Some Other things the IRS may might look at is the amount of time and activity that you put into your business and whether or not you depend on income from it and does it how profit potential.

Estimated Taxes are Due April 15, June 15, September 15 and January 15 (with some exceptions for holidays, etc.). If you don't pay your estimated taxes in a reasonable timely manner, you may owe an additional tax penalty.

What you are calculating is the amount you must pay for self-employment tax on your income, which is the combined Social Security and Medicare taxes paid by an employee and an employer. Because you run your own business, you required to pay both the employee and the employer portions. Self-employment tax must be paid whether or not you owe any federal income tax.

Self-employment tax when you are putting money aside for your estimated income taxes, don't forget to set aside additional money for self-employment tax. From the perspective of the IRS, working as a blogger means you run your own business and that your income from that income is taxed.

Keeping Track of Expenses: I cannot stress enough how important Good record keeping is. I was audited by the Irs years ago. I made several costly mistakes but I was forgiven of those mistakes with a warning by the IRS, solely based on the fact that I kept my paperwork extremely organized. They were able to wiz through thousands of receipts and expense. This was much better than dropping a load of jumbled receipts on their desk and expecting them to calculate them.

Ideas for keeping track of expenses and deductions: There is a giant Plethora of options for keeping track of expense ranging from simple excel spreadsheets to $400 + accounting programs where Programs like Quickbooks, Peachtree and Quicken Etc. Quickbooks hands down is probably, still, after all these years the consumers choice. (Side note: Keep a small ledger in car to keep track of business mileage. The Irs will ask if you keep track of your mileage. )

I cannot stress enough!! Keep receipts, keep them in categories. Print them, ask for them, and get them. (Stubs, PayPal receipts, emails etc.)

a special tax rule allows you to deduct up to $5,000 in start-up expenses the first year you are in business, and then deduct the remainder, if any, in equal amounts over the next 15 years.

For an expense related to your business to be deductible, it needs to be both “ordinary” and “necessary”. No matter what industry you are in, that is the standard for the IRS. So, any time that you question whether something is deductible, as a first step, ask yourself is this “ordinary” and “necessary”?

An ordinary expense is one that is common and accepted in your industry. It’s the one time that you care about what your competitors are doing. No matter what your mother says, it does matter whether everyone else is doing it, too.

A necessary expense is one that is helpful and appropriate for your trade or business. You don’t have to prove that you couldn’t be in business without the expense – more or less, it needs to make good business sense.

You’ll need to retain excellent records with annotations about the expenses

Always check with a tax professional if you are unsure if something is or is not deductible. Call IRS during tax season or check out the interactive tool at 

 https://www.irs.gov/uac/Interactive-Tax-Assistant-%28ITA%29-1  or H&R Block

Deduction Categories: (remember to err on the side of caution when it comes to the IRS and only deduct the business portion of items you are claiming.)

Corporation incorporates fees. Advertising & Marketing (Head Shots, promotional materials, advertising spots on other blogs, business cards, signs, printable, flyers, ad spots, newspaper spots or advertisements, Logo design etc.)Trademark and copyright fees,  Depreciation (Long-Term Assets Long-term assets are things you purchase for your business that will last for more than one year,(must be used more than 50% for business such as computers, office equipment, cars, and machinery. Long-term assets you buy before your business begins are not considered part of your start-up costs. Instead, you must treat these purchases like any other long-term asset you buy after your business begins: You must either depreciate the item over several years or deduct the cost in one year under Section 179. However, you can’t take depreciation or Section 179 deductions until after your business begin.)Office Supplies (Tax software, Accountant, Tax prep etc, paper, printing, ink, pens etc.) Postage, PO Box, Materials and supplies to create a post that makes you money (including shipping if applicable), Prizes, Gifts and giveaways. If you make the gift you can only deduct the cost of creating the item, for example I make bath salts and sell them on etsy. I can deduct the cost; let’s say 2 dollars that I paid to make the bath salts. NOT the full retail value. Vehicle, travel and meal expenses (blogger meetups, small business seminars and blogging conferences) any sort of Education related to your business (including but not limited to eBooks, courses, seminars etc.) ANYTHING Downloaded for business purposes, Costs and expenses to run your blog (Domain name, Webhost, Logo Design, Web templates, WordPress plugins and costs, Cost of contractor to help you, Internet Fees and Phone Fees as well as cell phone fees. If you use the cell for personal you figure a percentage to deduct for business. Let’s say you pay 100 a month and use your phone 50% for business then you can deduct $50 a month for cell phone fees as well as additional app charges related to your business. Digital Cameras, Design Software, memory cards or other peripherals and or equipment. Dues and Subscriptions, Paid websites for subscriber newsletters etc like mailchimp,

Equipment, Material and supplies used solely for the purpose of creating an engaging blog post; here are some examples: http://www.taxgirl.com

• Your blog is a baking blog and you make a full course meal, soup to nuts. Is it deductible? Perhaps the cost of the sourdough bread is … but not the rest of the meal.
• Your blog is a baking blog and you make three loaves of sourdough bread. Is deductible? Probably the cost of one loaf – that’s the part you needed for your review, right? But not three. The other two are likely to be eaten for personal use and are not deductible.
• Your blog is a general food blog and you make lasagna for your entire family. Is it deductible? Maybe. If your blog is a “family food blog”, then perhaps the family-sized portion is deductible. If your blog focuses solely on a niche, like healthy eating or cooking with noodles, then only the portion attributable to you, for the purposes of testing, is deductible.

Business Use of Your Home' Not a fan of this. It’s a red flag for IRS If you use part of your home for your business, you may be able to deduct expenses for items such as mortgage interest, insurance, utilities, repairs, and depreciation. To qualify you must meet the following criteria:

a) The business part of your home must be used exclusively and regularly for your trade or business. However, there are exceptions for daycare facilities or storage of inventory/product samples.

b) The business part of your home must be:

- The principal place of business, or

- A place where you meet or deal with patients, clients, or customers in the normal course of your business, or

Some Apps that I came across to help you are (Software programs Quickbooks, Peachtree, Quicken)

AndroMoney FREE

Expense Manager by Bishinews FREE

Concur

Small Business Accounting Pro FREE

Daily Expense FREE

Book Keeper Accounting and Invoice FREE

Real Quick I was asked “If I am sent a product for review is this taxable” Right now there is not a lot of information from the IRS indicating the specifics on this. If you make money generated because of doing this review my answer will be yes you may need to count it as income. Sorry.

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