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Tax question regarding small side business (~$12k additional income/year)
Posted on 12/14/15 at 10:10 pm
Posted on 12/14/15 at 10:10 pm
Next year I'm going to try to turn a hobby I enjoy into a money making proposition. At best I think I could make $1k/month cash for the time I'm willing to put into it; just a little spending/fun money. Anyway, I've never filed anything other than standard deductions as I don't have enough to make itemizing worth it.
With what I've described above, how much tax burden will I add? Is there anything else I need to consider?
With what I've described above, how much tax burden will I add? Is there anything else I need to consider?
3
Posted on 12/14/15 at 11:57 pm to poochie
Others with more experience will give better insight, but I'd expect you will need to file the self-employment form and pay the 15.3% tax (12.4% SS, 2.9% Medicare) on your net income (after taking out business expenses). Then that net income would be taxed as income on your 1040 along with your other wages.
Posted on 12/15/15 at 7:03 am to poochie
$1K/month cash.
What business...
What business...
Posted on 12/15/15 at 8:59 am to poochie
1k/month is after expenses?
You will owe self-employment tax (rate depends on other earned income), federal income tax and state income tax (rate depends on marginal tax rate)
Make sure you document and have receipts for all business expenses.
You will owe self-employment tax (rate depends on other earned income), federal income tax and state income tax (rate depends on marginal tax rate)
Make sure you document and have receipts for all business expenses.
Posted on 12/15/15 at 9:28 am to LSUFanHouston
The business would be building outdoor furniture (swings, adiroandak chairs, etc) out of cypress as well as misc "farmhouse" furniture (tables, benches, etc).
I figure for an average unfinished swing I can make $150 profit.
I would also offer finishing (paint or sealer) and delivery (both at additional cost). I'd love to offer installation but I assume that would require some sort of insurance. Would simply supplying a product require any type of insurance?
So I'd have to move the equivalent of 10 swings/month to make clear $1000 after taxes. Again, I think I could work up to this but would aim for 3-5/month to start off.
Also, the profit margin on farmhouse tables would be even better.
I would use word of mouth, Craigslist, and social media for advertisement; I do not want to get into the "craft show" circuit.
I figure for an average unfinished swing I can make $150 profit.
I would also offer finishing (paint or sealer) and delivery (both at additional cost). I'd love to offer installation but I assume that would require some sort of insurance. Would simply supplying a product require any type of insurance?
So I'd have to move the equivalent of 10 swings/month to make clear $1000 after taxes. Again, I think I could work up to this but would aim for 3-5/month to start off.
Also, the profit margin on farmhouse tables would be even better.
I would use word of mouth, Craigslist, and social media for advertisement; I do not want to get into the "craft show" circuit.
Posted on 12/15/15 at 9:52 am to poochie
I'm not sure on the liability question, but given the litigious nature of folks these days it wouldn't be a bad idea to incorporate.
Posted on 12/15/15 at 10:21 am to poochie
quote:
Would simply supplying a product require any type of insurance?
Form an LLC, and I'd probably get some kind of general liability insurance. In case someone sits on the swing, it breaks in half and someone gets hurt. That sort of thing.
As a side topic (somewhat) where are you located? If you are in S. Louisiana, once you get things going, if you have a website or something let me know. I've been looking to buy a nice swing next year.
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