Tax Tips For Small Scrapbook Businesses

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Tax Tips
For Small Scrapbook Businesses

By Sue DiFranco
Copyright 2001 Sue DiFranco/Fun Facts Publishing

It's nearing the end of tax time! You've still got time to get your forms in though, so make sure you get the amount of deductions you deserve.

First, the difference between a business and a hobby:
The IRS defines a hobby as an activity engaged in primarily for pleasure. Once you get to the point where you are trying to make a profit, are making regular business transactions, and have made a profit at least three years out of five, the IRS considers it a business.

Whether you've made a profit or not, if you are a registered as a sole proprietorship or general partnership, you will need to report your income and expenses on Schedule C of your 1040 form. (Please see below for more information.)

Your Deductions: Add 'Em Up!

According to the IRS, you may deduct any expense that is “ordinary, necessary, and somehow connected with the operation and potential profit of your business.” Here's a checklist of some of the things you can write off:

Phone usage. All calls made to clients or customers, plus your monthly voice mail bill (if you have one).	Magazines and books. Yup, all of your scrapping mags and books, plus business, parenting, family, etc.
Schooling. Write off those classes and crops!	Mileage. Do you travel to meet with clients?
Postage. If you're an Internet storeowner or mail order maven, this could really add up.	Memberships and Professional Dues. Member of HIA or ACCI? Write it off!
Internet connection. Deduct your monthly ISP and Web hosting services.	Advertising. Classified ads, display ads, radio ads, TV ads...
Office supplies. Paper, pens, envelopes, etc.	Printing and Copying. Your business cards and other sales materials.
Interest on business loans or credit cards that are used strictly for business.	Accounting fees. Write off the amount you spend to pay someone else to do your accounting!

Open your mind to other possibilities. Is there any way a certain expense can be deducted as a business expense?

Remember to keep receipts for EVERYTHING! These are important to have A) in case you ever get (gulp!) audited, and 2) it will help you when you fill out your accounting records.

Getting Organized

Save every receipt that could be written off as a business expense

Keep up with your accounting. Sure, it's one of the most tedious, non-creative parts of your biz, but if you save your receipts in an envelope and transfer them to your ledger once a week or once a month, it will make things A LOT easier for you come tax time.

Invest in an accounting program like Quickbooks or Simply Accounting. You can usually find a relatively inexpensive one on Ebay. For very simple accounting records, you could even use Microsoft Excel.

Keep an envelope with you at all times to just stick receipts in as soon as you get them.

Keep a notebook in your car to keep track of mileage.

The Home Rule

The IRS has recently changed its policies on home-office deductions, making it easier to write off things such as rent, utilities, and insurance. However, you MUST use this portion of your home ONLY for your business. For more information on home office deductions, please see IRS Publication 587 ("Business Use of Your Home").

Read everything you ever need to know here:

http://www.schedulec.com

http://www.irs.gov

http://www.irs.gov/smallbiz/index.htm

ABOUT THE AUTHOR

Sue DiFranco is the founder of Fun Facts Publishing and the author of more than a dozen books on building and marketing scrapbooking businesses and services. To learn more about how to turn your scrapbooking passion into profit, visit http://www.funfactspublishing.com to read a library of FREE information and get started today!

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