We are so excited to have the amazing Amy Northard, the accountant for creatives, on the blog today. One of the questions we get asked all the time (and one that was heavy on our minds when we first started) is how do you know when you should start reporting your business income? Well, since we’re big believers in treating your business like a business we wanted to bring Amy on to explain all about reporting your business income!
Taxes are probably the last thing on your mind when starting your creative business, and that’s totally understandable. But, do yourself a favor and set aside a few minutes to learn when you need to start reporting your business income and expenses on your tax return. You’ll thank yourself later!
The first year you accept money from a client or sell a product to a customer, the IRS wants to know about it when you file your annual income taxes. If you’re a sole proprietor or single-owner LLC, you’ll report the income and expenses on a Schedule C form.
If you have a partnership or S-corporation, you’ll report the income and expenses on a completely separate tax return. For our purposes, we’ll focus on sole proprietors and single-owner LLCs.
Along with the Schedule C form, if your business has made a profit (income minus expenses) of $400 or more, you’ll need to file a Schedule SE form. This is the form that the IRS uses to calculate your self-employment tax of 15.3%. If you use a tax software for your taxes, the form will compute automatically.
There’s a myth that if you receive less than $600 from a client, you don’t need to report the income on your taxes. Don’t believe this myth. The IRS wants you to report all income, even if you didn’t receive a 1099 form from the client.
The bottom line is that if you receive money through your business, the IRS wants to know about it when you file your taxes.
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You’re invited to a private membership community that’s loaded with all the necessary tools to grow and up-level your small business. We know it can be overwhelming with everything that’s on your plate right now. We know you’re being pulled in every direction trying to decide which area of your business to focus on. You’re wearing all the hats right now. We want to help simplify and give you some strategies to move your business forward no matter where you are at in the process.
Inside this growing community you will have access to worksheets, guides, ebooks, educational workshops and strategies that have helped other creative entrepreneurs just like you grow their business with clarity and ease. By dedicating just 30 minutes a day, these women have seen crazy success (seriously, one gal 12x her Instagram following in 2 weeks, another started seeing an influx in online sales and one even raved this was the best investment she ever made in her business).
This post taught you that you should be reporting your income so now let’s take it a step further inside the Biz Chic Co-op. Ready and waiting for you right now are materials designed for you to build and grow a profitable buisiness. You’ll find things like My Biz Finances, the Pricing Formula and Making Sense of Your Taxes were made specifically for you. See more about each of these worksheets (and all the other amazing material you'll unlock here).
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