We are knee deep in February and that means we are in the midst of the federal tax season.
Regardless if a profit is made, artists and crafters who take in money are obligated to file federal income tax and in some cases there is a state income tax to deal with as well.
Hopefully the records have been kept and there is a nice money trail to follow when doing the taxes. This is where accounting programs like quick books shine. If you have been diligent in recording transactions you will be rewarded with accurate reports that are generated in seconds.
Even if you used a long hand system you will probably have all the data necessary to file.
If you did not you have a lot of work to do! If it looks like you will run out of time before the April 15th date you can file for an extension. This will give you an extra 6 months to get your books in order. The form is available on the federal publications page. (The link is further down.)
Once you have the figures you probably will have questions on the best way to file depending on your business structure and how much money you pull in.
A good place to start would be the federal government forms and publications site . Take a look around and read up on the forms offered.
If you are still confused you may want to confide in a professional such as a tax preparer or accountant. A good bet would be a full time, year round company as opposed to one of the many companies that spring up like weeds every January. If you don’t mind dealing with a preparer who just finished a 2 week crash course then be my guest but you will probably not pay any more if you use a qualified professional.
If you made a bunch of money a CPA is the best bet. Yes they have an hourly wage that can sometimes be quite steep but they can save you a ton of money. For example the first year we used a CPA we ended up saving well over $10,000.00. Well worth the $300.00 it cost us.
Beware of taking advice from people who are not income tax professionals. Even if the rule your brother in law is citing was applicable last year it may not be this year.
What ever you do make sure you file. The income tax people are relentless and they will stop at nothing to get what they are owed, even small amounts.