Keep your Etsy/crafts business income and expenses separate from your personal stuff

Many creative entrepreneurs and Etsy shop owners fail to separate their business income and expenses from their personal income and expenses. This is called “co-mingling of funds.” A good way to separate business income and expenses from personal income and expenses is to open a separate business bank account. Be sure to run all business income and expenses through the business bank account. The reason that you want to separate business from personal funds has to do with legal and tax purposes. First, when a business is organized as a limited liability company, corporation, or partnership, that business it is a separate legal entity from its owner or owners and it should have a separate bank account. Second, co-mingling of funds can bring up a lot of negative consequences in case of an IRS audit. On my next post I'll talk more about business income and business expenses.

For a free article "10 Things You Must Know About Taxes, Bookkeeping, and Business Licenses" and for free Excel worksheets just for Etsy shop owners and creative entrepreneurs visit my website.

Stop worrying. Save hours of research online. Check out these Tax, Business, Accounting and Bookkeeping PDF e-book guides written by a CPA and creative entrepreneur just like you. Available for instant download.

Etsy and Crafts Business Tax Primer

Many small business owners are misinformed when it comes to taxes. There are many different types of taxes that businesses and individuals pay. I’ll go over some of them:

A business pays different kinds of taxes:

            Income Taxes:

§  Federal income taxes to the IRS (depending on the business structure selected)

§  State income taxes to the states where the business is doing business

§  State income tax rules vary from state to state – some states don’t have a state income tax on corporations or businesses

Sales taxes and use taxes:

·       Collected by the seller on taxable sales and services provided within the seller’s state

·       Sales and use taxes are paid to state and local authorities

·       Sales taxes are not considered “income” taxes. You collect sales taxes from the buyers that reside in your state and you submit the sales taxes collected to your state

·       You register to collect sales taxes with your state (not the IRS). Rules vary from state to state regarding what items or services are taxable. If you are unsure you need to contact your State’s “Department of Revenue.”

Payroll Taxes:

·       Paid to the IRS and the state where the business hires employees (this applies only if the business is paying employees)

·       Payroll taxes are not considered “income” taxes

An individual (a person) pays different kinds of taxes:

§  Federal income taxes to the IRS

§  State income taxes to their state (if the state has an income tax)

§  Self employment taxes to the IRS for certain business earnings

It's important that you now the differences in the kinds of taxes that you need to pay for your Etsy and crafts business. 

For a free article "10 Things You Must Know About Taxes, Bookkeeping, and Business Licenses" and for free Excel worksheets just for Etsy shop owners and creative entrepreneurs visit my website.

Stop worrying. Save hours of research online. Check out these Tax, Business, Accounting and Bookkeeping PDF e-book guides written by a CPA and creative entrepreneur just like you. Available for instant download.

Is your Etsy or crafts business legal?

The process for making a business “legal” or obtaining a business license or permit can sometimes be confusing for Etsy shop owners and craftypreneurs. Here is what you must know.


You obtain a business license or permit from your state. This process is called “register to do business”. Rules vary from state to state. Some states require you to file an “assumed name” or “dba” if your business name is not the same as your name. You must check with your State’s “Secretary of State” office to determine what your state’s requirements are for registering to do business in the state. You can go to the IRS’s listing of state websites at  http://www.irs.gov/businesses/small/article/0,,id=99021,00.html to get the link to your state’s “Secretary of State website.” If you are unsure what to do you can call or e-mail your state's secretary of state office. You can also read information provided at MyCorporation.com.  This is an online service that will assist you with incorporating and forming a business for a fee.  Their website has a lot of free information that you can refer to.

You may be asking yourself, what about the IRS? Don’t you get a business permit or license from them? No, you don’t. You pay taxes to the IRS but you do not register to do business with the IRS. I'll cover that in the next post.

For a free article "10 Things You Must Know About Taxes, Bookkeeping, and Business Licenses" and for free Excel worksheets just for Etsy shop owners and creative entrepreneurs visit my website.

Schedule C Basics for Creative Entrepreneurs and Etsy Shop Owners

What is Schedule C and do you have to file one? If you sell crafts on Etsy or other online venues you probably have tax questions. The most popular questions that crafts business people have pertain to Schedule C. Here are some basics. Schedule C is the form that you fill out to report "Profit or Loss from Business Sole Proprietorship." Schedule C is filed together with Form 1040 when you filed your federal U.S. income tax return. Generally, a small business owner who has chosen to be organized and taxed as a "sole proprietor" or a "Limited Liability Company" files Schedule C. A small business owner must file Form 1040 if the net profit from their business and self employment income for the calendar year (January through December) was more than $400. If you are required to file Form 1040, then the net profits from the business and self employment income are reported on Schedule C. In order to fill out Schedule C you need to know what your business income and expenses were for the calendar year. For more information, free downloads including a simple bookkeeping worksheet to use to fill out Schedule C, and for ebook guides and resources for Etsy business owners and creative entrepreneurs visit my website at www.MyCreativeCPA.com.

Tax Help For Crafters and Etsy Shop Owners - Tips For Working With A Tax Preparer Or CPA

Here are a few tips for working with a CPA or tax preparer. If you don't know how to find a CPA ask around for recommendations. Always ask them for an estimate before they do your taxes and shop around for rates. Most importantly, find a CPA or tax preparer that you like.

1. Send everything to your tax preparer or CPA during the month of February. This way your return will be completed quickly. Most people wait until March and April. By this time, CPA’s and tax preparers are swamped with work and your return will not get done quickly.
2. Never e-mail anything containing your social security number to your CPA or tax preparer and do not allow them to e-mail you copies of your tax return. E-mail is not secure.
3. Send your CPA or tax preparer all of your information at one time. Do not send partial information. Your fees will be higher if they have to change your return several times because you keep sending additional information.
4. Send your CPA or tax preparer your bank account number and ABA number so that the IRS can send your refund directly to your bank account. Be sure that you provide the correct numbers.
5. Do not send your CPA or tax preparer a box full of receipts and records. They don’t need it. If they have to look for something they will generally bill you to look through your box. It’s best for you to hold on to your box of information and only send them something if they ask for it.
6. If your CPA or tax preparer asks for any business receipts or documentation – send them only copies. Never send your CPA or tax preparer any original documentation. They may lose it.
7. Your CPA or tax preparer is not the IRS. They don’t need to get all of your business receipts and documentation. They don’t have a responsibility to verify most of the information that you send them.
8. Your CPA or tax preparer is not a mind reader or professional organizer.
   1. Do not send hand-written notes or papers with numbers and scribbles on them.
   2. Do not send documents that you think are tax related but are not
   3. Do not send disorganized information. It’s best if you paperclip together (do not staple) similar documentation.
9. Respond promptly to CPA or tax preparer when they have questions. The longer you take to reply to them the more time that will pass. If you wait too long, your tax return will go to the bottom of the pile and other returns will be completed before yours is completed.

10 Things Every Creative Entrepreneur and Etsy Shop Owner Must Know About Taxes, Bookkeeping, and Business Licenses

I just wrote an article "10 Things You Must Know About Taxes, Bookkeeping, and Business Licenses" just for Etsy and crafts business owners who need help with taxes, bookkeeping, and business licenses. It is free for you to download from my website. Read this if you have an Etsy or crafts business or if you are thinking of starting one.

Tax Help For Etsy Sellers, Crafters, Indiepreneurs, and Creative Entrepeneurs

If you own an etsy shop, arts, design, or crafts business and need help with schedule C and getting ready for tax time - read this guide! I have just published my third e-book especially for creative entrepreneurs. This is a comprehensive tax guide to help you with your Etsy business or crafts, arts, design, or indie business. This ebook tax guide covers everything you need to know to get ready for tax time and tackle that dreaded Schedule C! Learn what is business income and expense. Learn what is deductible. Learn what records you need. You can read more about them at my website and download free worksheets - such as a simple bookkeeping and accounting worksheet, mileage log, inventory worksheet, and fixed assets worksheet. Don't ask for business advice in the forums anymore. Save yourself hours of research, frustrations, and headaches. Order my ebooks today!

New Website for Creative Entrepreneurs, Etsy Shop Owners, and Crafters

After 3 years my idea has finally developed into a website. Introducing MyCreativeCPA.com. A website specifically for creative entrepreneurs, crafters, artisans, artists, designers, indiepreneurs, and creative mompreneurs - anybody who sells crafts, arts, and designs. I have written a series of PDF e-book guides about business, tax, accounting, and bookkeeping topics specifically for you creative entrepreneurs. Do you sell crafts online? Are you an indie designer or crafter? Do you know what the IRS and state and local requirements are for engaging in a small business? These e-books are informative and easy to read and will provide you with everything you need to know to set up your business for legal and tax purposes, business, accounting, and tax topics. 

New Blog - Creative Biz*ology - Tax, Numbers, and Business Tips for Creative Entrepreneurs, Etsy Shop Owners, and Crafters

Introducing my brand new blog - Creative Biz*ology. The premier blog for providing valuable tax, accounting, bookkeeping, record keeping, and business resources and tips for creative entrepreneurs, Etsy shop owners, and crafters. Finally, information provided by a "CPA" (Certified Public Accountant) who is also a creative individual. When it comes to business matters, don't be afraid - be informed. Get your information from a reliable source.