I’ve seen lots of posts with confusion about the new 1099 Paypal is sending to some sellers. Here’s the scoop:

• The 1099 Paypal is sending out is only fulfilling their obligation under a new law, it has nothing to do with whether or not you are required to file income taxes.
• Paypal will only be sending it to people who bring in at least $20,000 AND have 200 or more transactions through PP.
• Regardless as to whether or not Paypal (or other company) sends a seller this form, the seller must report income for their business if they meet the IRS’s requirements for filing a return.

Do you meet the requirements? Generally speaking, if you have to file income tax for any reason (day job, filing jointly w/ spouse, etc) you must report all your income on your taxes. If you have at lest $400 profit from your small business, you will most likely need to file. Your best bet is to get info about whether or not you need to file directly from the IRS–this post should help:

And if you do need to file, this post will help with getting & adding up your income/expense info from Paypal:

This one will help when you are filling out the schedule C to report your small business income:

Turbo Tax: Many folks ask about whether or not they need to get the Home & Business version of TurboTax. I haven’t tried that version myself, but I do know that with Turbo Tax Deluxe, you can use the ‘add a form’ feature and add the schedule C to your taxes.

The interview process in the TurboTax Deluxe does cover the schedule C once you add it, but their website implies that the home & business version has more help for filling the schedule C out.

Income tax is totally separate from sales tax requirements for your business. See here for help with sales tax & business registration:

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It is set up for tax year 2009, but should still give you a good idea if you need to file:

There are other questionnaires like this on the IRS site too:

If you need to file, you’ll need to report all your income. The following post should be helpful to you:

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It’s that time of year! Lots of folks looking for info on getting their records ready for income taxes–the links below should help. (Links open in a new window.)

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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.

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If a state isn’t there and you’d like to see links please leave a comment with the state and I’ll add it to the top of my list!

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This time of year many folks seem to have questions about where different business expenses go in your annual income taxes.

Generally, you should get your answers from people in the know–that means directly from the IRS or from an accountant or tax preparer that has experience with small business taxes.

Non-official websites and forums are not a good place to get answers. You’ll never know if the person supplying the info actually has a good understanding of the laws or if they just talk a good game if you don’t go to the source.

In that vein, I offer a few official IRS website links that I have found very helpful. (Links open in a new window or tab depending on your browser settings.)

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.

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The first thing about taxes and your small business is that sales tax is completely unrelated to your annual state and federal income tax.

Sales tax:

Collected and regulated on a state level, so every state has its own laws that govern the collection and payment of sales tax by sellers to the state. The laws vary widely, please always contact your state directly if you have any questions or get the info directly from your state’s official website.

If your state has sales tax, you need to register with the state to be authorized to collect it from your customers, then you pay the state the money you collected according to the schedule the state provides you, on special forms that are only for sales tax remittance.

Some states require sales tax be remitted monthly, some quarterly, some once a year. In some states the schedule changes depending on your sales. Your state will tell you how often you should remit it.

Income tax:

Paid by US citizens/residents and those employed in/selling from the USA at the federal level and at the state level (if the state has income tax). Due April 15.

I’ll be adding posts about sales tax in different states as we come across it, primarily I’ll be covering New York since that’s where we are located/most knowledgable, but please still double check the information–even if I’m posting it.

I’ll be adding information about small businesses and income tax soon too.