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New York Sales Tax Annual filers:
If you haven’t already, get your March 1 2012 through February 28 2013 sales tax returns in by midnight tomorrow–March 20, 2013!
See the schedule here:
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April 15, 2013: See that on the IRS website here:
http://www.irs.gov/individuals/article/0,,id=118506,00.html
If you need to file income taxes for any reason, you’ll need to include your small business income no matter how small it might have been, or even if this year your business shows a loss instead of a profit. Need help finding out if you need to file at all? See here:
Do I Need to File a Tax Return?
If you’re having trouble with the Schedule C (sole proprietorships report their business income on the schedule C), the IRS publications linked to from here might be of help–these are documents that help address line numbers that are missing/are poorly covered in the Schedule C Instructions:
US Sellers: Help for Filing Income Taxes for Your Small Business
and if you still have questions, you can get answers directly from IRS employees. Most workers I have talked to have been nice, so don’t let their employer put you off. 
You can give them a call toll free, be sure to ask for someone who can help with the Schedule C (profit/loss for businesses) if you’re filing as a sole proprietorship:
Live Telephone Assistance
http://www.irs.gov/help/article/0,,id=96730,00.html
or you can go to a local IRS office and sit down with someone in person:
Taxpayer Assistance Center Office Locator
http://www.irs.gov/app/officeLocator/index.jsp
When I call for help, I ask which publication number the answer can be found in and on what page.
Sometimes reading a rule in context helps you understand it better and you can be more confident that the answer applies to your specific tax situation.
Sometimes a taxpayer doesn’t mention all the things needed to get an accurate answer when speaking with an IRS employee, and sometimes the IRS employee doesn’t understand the full question/situation and reading the answer in context might give you the tip off that the answer wasn’t right for your tax situation & that you might need to call back & clarify what you need.
You can find links to all the IRS publications on their site:
I like to download PDF versions to search the document easily for key words, but I prefer to read the online versions (html) because of the links to other pages that can be helpful.
This is a good news / bad news post–be sure to read to the end.
Good news:
US sellers who aren’t using Direct Checkout can now use Etsy labels! I’m very excited to give these a try for our First Class International packages.
As fun as the stamps are using our current method for printing First Class International labels and getting the customs form submitted online (for free), I’ll also be pleased to have a smoother process for mailing our international Etsy orders.
Bad news:
If you’ve been using Etsy’s labels and haven’t been paying attention, you might be in for an unfortunate surprise.
When you print the label, sometimes it is not printing the label you see on the screen–sometimes it prints the previous label again… for some sellers these packages are already in the mail.
It’s been happening for at least a week now. One admin suggested the conflict is with FireFox, another post said FireFox and Windows 7. How ever it goes–be sure to check your label before mailing your package!
See a few posts on the topic here:
Scary Shipping label Problem – 6 Packages Sent to One Customer
On page 2 of the thread above Mocahete shares what’s been working to avoid this for them. More threads on the topic:
Serious Problems with Etsy Shipping Labels
Here’s hoping your packages all get to their intended destination without coming back to you first!
Go To Great Panes, Kathryn Maloney ©2012
This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.
Since most packages arrive at their destination safely, many sellers choose to self-insure instead of purchasing insurance from the service they are shipping through or through third-party insurers (great for insuring International First Class when you need it since USPS doesn’t offer insurance on First Class International Mail). Some call it a rainy day fund, some just consider it part of their overhead.
How do you self insure?
Basically you build a little into your item price or shipping to cover your losses–say 25 or 50 cents–or whatever works out right for you/your item prices, then put that extra money aside to cover the few packages that go missing.
For example, if you have 1 in 100 packages go missing, raise your item prices or shipping by the cost of a missing item divided by 99 delivered packages and you should be good. For a $24 item:
$24.00 / 99 = about $0.25
That’s a real simple example, it won’t be as easy if your prices vary a lot, but should give you an idea of how it works. Even if you added $1 to every $24 item to cover the losses, your buyer would still be paying less than if you insured through the postal service. Another great benefit–you don’t have to file an insurance claim with anyone to wait to be re-imbursed. You have the money, you take care of your buyer, the end.
When do you self insure & when do you pay for insurance?
Every business has a different price point at which they need help covering the loss of an item. If you mostly sell $25 items but have a few that are far more expensive, you might choose to purchase insurance on the pricey items.
If you have a few that are especially delicate or irreplaceable, those might be ones to pay for insurance on, while if you whole business is delicate or irreplaceable items, you might just charge a bit more for your self-insurance.
Is self-insurance legal?
I have read a few times that self-insurance is illegal in some places, though I haven’t been able to find information about that when it comes to shipping–just car insurance, employee health insurance, that sort of thing.
To be on the safe side, we don’t mention insurance unless it is a package that we’ll purchase insurance for, from an extrernal insurer (like USPS, third party insurers, etc.)
More on purchasing insurance here, including information on third-party insurance:
And more shipping help in general here–same as the gold link in the right sidebar of every blog page:
Go To Great Panes, Kathryn Maloney ©2012
This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.
Time to consider what you’ll be setting for your holiday shipping cut-off dates.
Hanukkah starts Saturday, December 8, 2012, so you’ll need a pretty early cut off for those celebrating–unless their aiming for later in the week.
Christmas is on a Tuesday this year–might make it a bit tricky since that puts Christmas Eve on Monday… We’ll want all our Christmas-celebrating customers to get their packages by Saturday–just in case.
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| International Mail USPS suggests these as the last mail-by dates for Christmas deliveries for 2012, deadlines by mail service & country |
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| Don’t forget–these timelines can change if your goods get stopped by customs. The UK has been cracking down lately stopping more packages than normal. Germany requires all packages to include invoices attached to the outside of the package (see here for more). It probably wouldn’t hurt to do that for other countries too. |
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Help for understanding what they are & when you need to pay them
So it seems the Etsy “Taxes, Typewriters, Teams!” email and the “Wrapping Your Head Around Quarterly Estimated Taxes” blog post have folks wondering what they are supposed to be doing tax-wise and plenty seem confused.
While the vast majority of sole proprietors might have to pay quarterly estimated income taxes as mentioned in Etsy’s blog post, that is not true of the vast majority of Etsy sellers since most don’t sell enough to owe enough in income taxes to file quarterly. I’m afraid that wording was scare-tactic-y, and has made many worry.
To help allay your fears, here’s the basic run down for US sellers…
None of this info is meant to be a replacement for a good small business accountant if you need one, just a way to lead you to the info you can get free from official sources.
Federal:
Income Tax & Self-Employment Tax:
Most US sellers are responsible for filing tax returns on their sales to the federal government. If you are a sole proprietor you file the schedule C with your personal income taxes at the end of the year to report your self-employment earnings (help with the schedule C here).
Quarterly Estimated Taxes: This is what the Etsy email & blog was referring to–it is just a way to pay you self-employment tax (Social Security & Medicare Taxes) as you go instead of paying it all at the end of the year. You only need to pay quarterly taxes to the federal government if you expect to owe $1,000 or more in income taxes at the end of the year.
Estimated taxes are like when you work for someone else & there’s tax withheld from your pay–for self-employed individuals there’s no one doing the withholding, so there’s estimated tax instead.
Most small sellers don’t need to worry about estimated taxes–if you didn’t owe anywhere near $1,000 last year and business is about the same, you’re probably fine but you should keep track of your books so you can estimate when you’ll need to start paying quarterly taxes.
To see this info on the IRS’ website, and to see the way you calculate tax owed before you do your end-of-year income taxes to see if you need to file quarterly taxes, see this IRS page:
“Who Must Pay Estimated Tax” section tells you about the $1,000 number.
“How To Figure Estimated Tax” section tells you the math behind your income & expenses that determines how much you’ll need to pay/shows you if you pass the $1,000 mark–as you see on that page, you use the IRS Form 1040-ES to do that math.
State:
Income Tax:
Most US sellers are responsible for filing income tax returns on their sales to their state government (in states with income tax). Some states will require you to file more often than once a year so be sure to check directly with your state for how it works.
Sales tax:
Most US sellers (whether a business or hobby / individual seller) need to file sales tax returns with their state government for the sales tax due in-state transactions. (More on sales tax below.)
Please note:
A few states also have business taxes, property taxes or other taxes but the rules are very different from state to state so I recommend checking out your state’s website and/or calling them for more details about your responsibilities (see the link below for your state’s official website).
Sales tax is a state-based tax and is totally separate from income tax. It usually requires the seller to register first, then collect tax from the buyer & remit it to the state on sales tax returns to be filed according to the schedule the state gives you (some monthly, some quarterly, some only once a year).
Generally, sales tax returns need to be filed whether or not you’ve had any sales.
If you haven’t registered with your state yet, this post will help you find the info you need directly from your state:
If you need more help, I can often be found in this Etsy forum thread–just post there and I’ll respond best I can:
I hope that clears a few things up and de-stresses a lot of sellers.
Go To Great Panes, Kathryn Maloney ©2012
This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.
We’ve got some Etsy News–policy update of the prohibited items list as of August 8th! Changes to a few different topics but one will change many, many listings on Etsy…
I’ve wondered if Etsy would ever make policy rules to protect buyers from the health claims seen in listings, and this policy change covers that.
Some may be upset by the policy that requires the removal of medical claims in item listings (for example in bath & body items claiming to treat medical conditions), but I think that it will protect buyers & keep some sellers away from the risk of breaking US federal regulations which require scientific proof before you can claim that anything will help someone medically.
Etsy’s blog post about the policy update:
Changes to the Prohibited Items List
Several admin posts clarifying the changes can be found in the forums in these threads if you need more info or would like to discuss the topic:
Site Help: Prohibited items
Business Topics: Anti Aging & Acne Treatment Removal
| July 11, 2012 version | August 8, 2012 version | ||||||||||||||||||||||||||||||||||
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Thanks to Rob White & stellaloella for responding to folk’s questions about the new policies.
Go To Great Panes, Kathryn Maloney ©2012
This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.
Go To Great Panes, Kathryn Maloney ©2012
This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.
Did you know that there are federal labeling requirements for textile & wool goods in the US? And if you’re making clothing, garment care labels are also required. There are some exemptions–the details of what is & isn’t covered by these requirements can be found on the FTC website (Federal Trade Commission):
and
These are US federal regulations, but some states also have rules you need to be following–the garment industry, for example, has rules that might apply to you in a few states.
New York & California both have special registration requirements for makers of garments, other states too–see here for links to official state websites where you can get more information about the state & local rules for your business:
So if you are selling goods made from cloth/fabric, yarn, wool, etc., be sure to brush up on what is required for your business!
Go To Great Panes, Kathryn Maloney ©2012
This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.
| Wondering what is going on with Etsy when the site goes down? Here’s how you find out: |
What’s your score? I got a 16–next time I’m going to brighten my monitor and see if I can do better.
Blog update: I recently updated the “Figuring Out Your Secondary Shipping Rates” post with details of how to account for the bump to Priority mail that shipping multiple items in the same package can trigger:
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