Tax Time for Online Sellers

Feb 24

Tax Time for Online Sellers

The second most popular question after “How do I make money on eBay and from other online sources?” is “How do you pay taxes?”

First of all, I’m not a CPA or a bookkeeper. At this point I do my own taxes using Tax Act Software. I’ve used this company for over six years now. I will say that one of my goals for 2016 or 2017 is to form an LLC. That’s because I have so many different streams of income.

We shared on our income post we have self-employed income from the following places:

Selling on eBay and Amazon

Ebooks on Kindle and Nook

Service Business

Niche websites

We also had a 1099 form for a cleaning business back in Alabama. We also earn an income by managing a storage facility near San Antonio.

All of these things have to be reported as taxable income and all of the self-employed income and expenses needs to be put on separate schedule C forms. Yes, this is a headache. I ended up filing five scheduled C forms. This is one reason we want to do an LLC. By creating an LLC, we’ll only need to do one form instead of four or five.

It took a while to get all of the paperwork together as well as gathering my numbers from Quicken. I use Quicken Home and Business, so it can run a schedule C report for me. I still had to figure manually which expense went with which business type for that particular schedule C.

If you’re starting your online businesses this year, don’t wait to start keeping good records. I love Quicken Home and Business software, but others use programs like GoDaddy bookkeeping or Freshbooks. Keep your receipts for anything spent on inventory, mileage and meals on the road if you’re sourcing for eBay and Amazon inventory. Update everything once a week and this will reduce the headaches come tax time. Speak to a bookkeeper to keep this all updated for you if possible and speak to a tax professional if needed. I’m pretty sure 2016 will be the last year I’ll be doing my own taxes.

Are you ready for tax time? Let me know in the comments or get in touch on Facebook or Twitter.

 

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