Question by Christy: How much do you have to earn in profit in a small business to report it on your taxes?
I’ve been selling some of my crafts recently (a little here and there to friends), and I don’t want to get in trouble for making money and not reporting it. I’ve been thinking about starting a small business for my crafts and I want to know if there is a minimum amount of profit that must be made to be required to file taxes on it. Any advice??
Best answer:
Answer by Gerald S
$ 600
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In my state you will have to file a W-9 for anything over $ 600.00 in sales or gains from service.
I do IT consulting and I have to fill out a W-9 for most of my jobs and I will receive a 1099 form at the end of the year that I take to my Tax Attorney. It’s just another tax form like any other, but it allows you to use a Tax ID if you’ve filed for one. You have to check a box for Sole Proprietorship or LLC then give your SSN or Tax ID.
It’s not a big deal really. You will have to get a hold of one through your states web site and fill it out and give it to the tax preparer at the end of the year.
If you make even $ 1 in net profits from your craft, you legally need to report it on your federal income taxes.
Now, if you take a look at all you’ve spent on your crafts, you’re probably going to have to sell a LOT of crafts in order to show even one dollar in NET profits.
But that’s the threshold.