It’s that time of the year again: Time to dutifully prepare your income tax returns, carefully complying with all state and federal guidelines. The simple reality is that nobody really loves tax season, and for small business owners it can be an especially busy time of administrative tasks.
If you’re new to filing taxes for your print on demand store, you can save yourself some time and headaches by reviewing a few basic eCommerce tax tips. Keep in mind that all businesses are unique, and that it’s usually best to consult with a professional accountant or tax prep expert. With that said, here are a few general guidelines to help you navigate tax season.
Consider Your Business Structure
Tax requirements vary depending on the type of business you have.
Most print on demand businesses are going to be sole proprietorships, which means that, as the owner, you are personally responsible for the business’ debts and liabilities. This also means that, in the eyes of the IRS, your personal and business assets are all in the same pot. Your profits and losses will be taxed at the same rate as your personal income tax rate. If this is the group you’re in, you’ll need to file a personal tax return, self-employment taxes, and a Schedule C. Finally, you’ll need to pay your estimated quarterly taxes. Whew!
If you run your print on demand business with another person, your business may be structured as a partnership. You’ll need to file income taxes, estimated quarterly taxes, and self-employment taxes, plus a Form 1065.
And if your print on demand store happens to be a limited liability corporation (LLC), you’ll have an entirely different set of forms to contend with, starting with Form 1120.
Gather the Right Documents
When the day finally arrives for you to fill out your small business taxes, it pays to be prepared. Before you do anything else, take some time to assemble all necessary documents. Again, all businesses are different, but for the most part this is what small business owners will need:
- Your business tax return from last year, if you have one.
- Payroll documents.
- Credit card and bank statements.
- Partnership agreements (if applicable).
- Depreciation schedules.
- Accounting documents, including cash flow statements, balance sheets, etc.
Of course, if you use small business accounting software for your print on demand store, you may have all of these documents organized digitally.
Estimate Your Quarterly Taxes
One of the most work-intensive aspects of filing small business taxes is estimating your quarterly taxes. Remember that the operative word is estimate. Some general tips to make your tax season a bit smoother:
- Estimate your taxable income for the year.
- Calculate the applicable income tax for that amount.
- Take into account other possible tax obligations, like self-employment tax.
- Add all of that together, then divide by four.
Account for Sales Taxes
Another difficult part of eCommerce taxes is taking into account sales tax. This is especially challenging when you consider the level of variation between different state sales tax laws. Often, the best way to navigate this issue is by investing in sales tax software, which can save you a lot of stress and uncertainty come tax season.
Don’t Forget Your Deductions
Small business owners can claim a number of tax deductions, ranging from vehicle costs to wages. Sadly, most of these deductions are generally irrelevant to print on demand businesses. However, you may be able to deduct expenses associated with contract labor, supplies, and any operational expenses that come up as you run your business.
For More eCommerce Tax Tips, Hire a Pro
We hope these basic tips are helpful, but keep in mind that all print on demand companies will face some unique questions and challenges. It’s incredibly important to remain tax-compliant, and the best way to do that is often to consult with a professional.
Beyond taxes, Gooten is here to support your print on demand business in a number of ways, including marketing tips, fulfillment services, and more. Ready to learn more about effective print on demand selling? Reach out to the team at Gooten and let’s talk further about the possibilities of partnering together.