If I start a small business from home do I have to pay taxes?
A friend and I have decided to start a small business (if thats what it would be categorized under).
We basically want to make handmade jewelry and accessories and sell it locally, we are college students and want to do something productive. Would we have to pay taxes as if it were a true business? The biggest this is going to get is maybe 50 or so likes on Facebook. Like I said, it's just a couple of college kids getting together to try a good idea. We don't want to get in any trouble with the law. We aren't planning on going international or even statewide, just something in our community.
Ps. We live in Louisiana. Thanks!
Yes, even small businesses run out of the home are subject to income tax, so keep your receipts and set aside some cash in case. If you don't earn a lot, though, you may end up paying little or nothing. Learning to do income taxes is a bit of hassle the first time, but once you know what to do it easy the next year. Anyone who can get through college can do taxes.
BTW, another answerer mentioned that you're in a competitive business with handmade jewelry. The flipside of that, though, is that there is a solid demand for your product category. I'd rather be in a very competitive business than one with few buyers any day. The trick is to identify your market and concentrate on a niche. Every competitive business has undeserved subniches.
See if you can make $400 a year, then ask again.
Remember to keep track of all your expenses.
Every single one on a spreadsheet and keep receipts.
Competition is FIERCE in this field.
You will have to price your end product just right to beat competitiors.
People that shop know what a good value is, and when they are being overcharged.
You can do anything you want under the table.by Ruler Of Hearts - 6 months ago
If you each make at least 400 dollars the law requires you to pay self employment tax.by Harry - 6 months ago
you pay taxes on net profit; it is 99% unlikley that you will have net profits if you allocate and consider
expenses--imputed or real.
do NOT JUST make jewelry.
do market research
write a biz plan
read biz books
get back to me!
Get this book.
Lower Your Taxes - Big Time
by Sandy Botkin, CPA, Esq.
former IRS atty and Senior Tax Law Specialist
Everybody should have a home based business.