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Home-based Business and Taxes


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It would depend on the tax bracket you are in, how close you are to the edges of that bracket and how much you net in your business (sales minus expenses.)

 

You need to keep good records (sales, expenses, cost of goods sold, mileage, etc.)

You would need to file a schedule C for your business with your taxes. This is where you figure out what your self-employment tax would be. You will want to do some planning to see how much that would be.

There are IRS publications on direct selling that can be helpful.

If you use tax preparation software, you can make up a dummy return to see what the impact would be.

If you are making a lot of money, you may need to make quarterly tax payments.

 

For us with my Usborne Books business, it has not negatively impacted our taxes as in bumping us up a bracket. Some years that were leaner for my business (either due to the economy or family situations where I had less time/energy to devote to the business), the tax writeoffs were quite beneficial.

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