“Iowa lot of taxes on my online sales!”
Hilarious, right? I think so—unless you really do have to pay Uncle Sam a good chunk of change this tax season. No one I know enjoys paying taxes. But with every tax season comes the possibility.
As you prepared your taxes did you have a hard time gathering receipts, logging expenses and getting a profit and loss reports? Did you find yourself digging through mounds of papers? Or, if you have yet to prepare your taxes, do you know where your receipts are?
If you don’t, I understand. I’ve been there, too. But this year was the easiest for me because I made a pledge while doing my taxes last year that “this year would be different” when it came to my record keeping. This year I was going to get organized!
Back in 2000, when my online sales first began to pick up momentum, I had no idea what records I needed to keep for my income taxes. I didn’t know I could write off the cost of listing my items on eBay, or the cost of the shipping materials. I was essentially clueless about what was considered an “expense,” and what wasn’t. If only I hadn’t been so naive back then.
Over the years, though, I have picked up tips on what is deductible, what isn’t and how to keep track of everything. Now I’d call myself “deduction savvy.” Thanks to the IRS’ tax tips for small businesses, I now know that what I spend on storage space is deductable because it is an expense for my business.
I keep my receipts for my purchases neatly organized in an accordion file. Profits and losses are clearly
I keep my receipts for my purchases neatly organized in an accordion file. Profits and losses are clearly highlighted.
And I’m much more organized. I no longer keep my receipts shoved into a box in the bottom drawer of my desk. I print out a quarterly spreadsheet (nothing fancy) of my online sales activity—everything from the original cost of an item, to the insertion and final value fees paid to eBay, to the shipping expense I paid (if applicable). I keep my receipts for my purchases neatly organized in an accordion file. Profits and losses are clearly highlighted. You’d think I was a CPA based on the level of organization I have when it comes to recording my online sales! Sure, organizing these items takes a little time, but it all pays off in the end. You know exactly where your receipts are, and when tax season comes around you don’t have to waste time digging through boxes to find them.
What a difference a year can make. I know firsthand. And now if Uncle Sam comes knocking at the door, I’ll be ready. Hope this inspires you to you tackle your record keeping.
Rebecca Miller is Auctiva.com's Product Manager. As an eBay seller of more than 13 years, Rebecca is well tuned into the needs of online sellers, and serves as an internal advocate for merchants. She continuously monitors Auctiva's Community Forums, answering customer's questions and taking their feedback to developers for future enhancements. Rebecca continues to sell on eBay, and has experience as a PowerSeller and a Top-rated Seller.