1. Keep all your receipts in a designated location. Sounds pretty basic, right? You'd be surprised how difficult this can be for "artist types." I'd much rather get on with making something than thinking about whether or not I've stored my receipts in the proper place. When tax time comes, however, I'm so glad that I HAVE stored my receipts in a central location!
2. Keep good records of your sales. So the notification comes that you've got a sale on Etsy and you're focused on packaging and packing and shipping. I get it. You want a happy customer. But you're also going to want a happy tax man and keeping good records of sales makes the tax man happy. If you're doing a show, this might be just a simple receipt book that lists the item sold, the cost of the item and the tax collected. With Etsy, it might just be printing out the sold orders page and putting it in that central place I talked about above. Either way, work ahead to avoid frazzles later.
3. Go to IRS.gov and familiarize yourself with the expenses in the Schedule C when you start your business. It may open your eyes to new receipts you should save or mileage you should keep and how to notate those expenses. Again, the tax man frowns upon guesstimates. Plan ahead and save some grief.
4. Ask for help if you are confused. There are a myriad of "small business" entities that can probably help you answer your tax questions. I know I've tapped my state resources when I've needed help. That's their job and they're usually happy to help unless there's some legal reason they can't.
That's it. That's my wisdom. It may not seem like much, but I wish I'd done some of these things when I first started a home based business those many years ago! And now, I've gotta get back to doing those taxes....
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