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(assuming you're in the US) if you've never had a business before, a couple hundred dollars of extra income is not material to your taxes and I wouldn't worry a

by zrail 4y ago

(assuming you're in the US) if you've never had a business before, a couple hundred dollars of extra income is not material to your taxes and I wouldn't worry about it at all. Once you get to the scale of a few thousand dollars a year, you can file what's called a Form 1040 Schedule C which allows you to declare your business income, claim expenses and other deductions, and include it in your taxable income. For that scale it's an extra 10 minutes with your tax software or even by hand, as long as you keep good records, and you're done. The point at which an LLC or other more formal business structure makes sense is fuzzy and can have different ranges depending on the business, but typically you probably don't need or want to invoke the expense of a CPA until you're making more than six figures (or if you've taken outside investment, obv).

LocalPCGuy 4y ago
The part about "just don't worry about it" is not really great advice, IMO. I think the rest is good, particularly the part about using tax software and/or doing a Schedule C. Just do what it says - it's pretty simple for small businesses - the amount in taxes paid will be fairly minimal. If you use tax software, use the business version and answer the questions and it'll figure it all out for you basically (might even find some deductions if you had expenses, like domain names, hosting, etc.). While the IRS likely won't audit you for a few hundred dollars (US), there are laws about what you have to do. You don't need to become a tax expert, but knowing the very basics so you don't run afoul of any laws and end up owing some $$ or penalties is probably worth taking a bit of time to do at the end of the year.
- zrail 4y ago
  That's fair, and I'm definitely not advocating tax fraud or anything of the sort. There's a $400 minimum for filing Schedule SE but no minimum for Schedule C. That said, it's _exceedingly_ unlikely (basically impossible, afaict) that the IRS will audit for Schedule C if you've never filed one and you don't exceed the filing requirements for 1099-NEC or 1099-K. The maximum tax in that case is measured in dozens of dollars.

by zrail 4y ago

LocalPCGuy 4y ago

The part about "just don't worry about it" is not really great advice, IMO. I think the rest is good, particularly the part about using tax software and/or doing a Schedule C. Just do what it says - it's pretty simple for small businesses - the amount in taxes paid will be fairly minimal. If you use tax software, use the business version and answer the questions and it'll figure it all out for you basically (might even find some deductions if you had expenses, like domain names, hosting, etc.). While the IRS likely won't audit you for a few hundred dollars (US), there are laws about what you have to do. You don't need to become a tax expert, but knowing the very basics so you don't run afoul of any laws and end up owing some $$ or penalties is probably worth taking a bit of time to do at the end of the year.

zrail 4y ago
That's fair, and I'm definitely not advocating tax fraud or anything of the sort. There's a $400 minimum for filing Schedule SE but no minimum for Schedule C. That said, it's _exceedingly_ unlikely (basically impossible, afaict) that the IRS will audit for Schedule C if you've never filed one and you don't exceed the filing requirements for 1099-NEC or 1099-K. The maximum tax in that case is measured in dozens of dollars.