If you have a small business you can deduct a lot of your expenses come tax time. Even if you dont have a small business registered if you’re running a part time business on Etsy you could still be considered self-employed and qualify to deduct your expenses. According to the IRS you are self-employed if any of the following apply to you:
More from the US IRS here
You can deduct all the expenses for the supplies, travel and if you use part of your home to make or sell (like a craft room or even your kitchen part time) you may be even be eligible to deduct a home office expense.
The trick is keeping track of all these expenses and keeping things separate as you go along.
Here are some tips for keeping track of your expenses:
- Carry a separate envelope of dedicate a section of your wallet just for business receipts and routinely file the receipts.
- Log the totals, categories and venues of all the receipts into a database every-time you file them. Doing a few at a time is way easier.
- Take a photo of receipts on your phone and email them to yourself as soon as you purchase. A lot of the receipt materials fade overtime having a photo is especially important if your used to dealing in cash (as with a lot of vintage shop scrounging!)
- Keep a notebook in the car or take a photo of your odometer before and after each trip.
- Separate your orders at the cash register. Even if you are paying out of the same account if your at the store and are buying some personal items along with your business supplies make two separate transactions to keep the receipts separate and easy to file.
For more info on what types of things can be deducted as part of your small business expenses check out the Deducting Business Expenses page the IRS website.