What Accounting System will You Use For Your Home Business?

 

Accounting is a necessity in any business, large or small. It is simply process of tracking money coming in and out of your business. Of course there is a lot more to it, depending on the type of business you do. I am currently trying to perfect my accounting for my resale business. It is a process, and I have actually taken accounting classes, with more to come soon. 

In the past I have always been in some form of business management. Each and every business I worked for had different accounting methods, but it was always for the same result. Where is money coming from, and where is money going to? With all of the research, learning, and tracking that you have already completed for your business, now the IRS needs you to choose an accounting method for reporting your income and expenses.

When filing the taxes for your business there are two basic accounting methods, for any other accounting methods, please read publication 538. I am posting the information available in IRS publication 583. Order your publications at the IRS website. If you ever search for the IRS or any government entity, be sure that it is a .GOV site. There are a lot of sites that look like it is authentic, but are scams.

 

Exert from Publication 583;

Choosing an Accounting Method:

 An accounting method is a set of rules used to determine when and how income and expenses are reported. You choose an accounting method for your business when you file your first income tax return. There are two basic accounting methods.

    1. Cash method: Under the cash method you report income in the tax year you receive it. You usually deduct or capitalize expenses in the tax year you pay them

    2. Accrual Method: Under the accrual method, you generally report income in the tax year you earn it, even though you may receive payment in a later year. You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. 

If an inventory is necessary to account for your income, you must generally use an accrual method of accounting for purchases and sales. Inventories include goods held for sale in the normal course of business. They also include raw materials and supplies that will physically become part of merchandise intended for sale. 

You must use the same accounting method to figure your taxable income and keep your books. Also, you must use an accounting method that clearly shows your income. In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows your income. An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. 

More than one business: 

When you own more than one business, you can use a different accounting method for each business if the method you use for each clearly shows your income. You must keep a complete separate set of books and records for each business.

Changing your method of accounting:

Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. A change in accounting method not only includes a change in your overall system of accounting, but also a change in the treatment of any material item. 

End Exert

Your accounting method is not only important to the IRS, but for your business. Since really starting Weeks Finds, my resale business, I have learned that accounting consists of a lot of different areas. There are purchases from many different places, and costs for almost everything is different even if you buy in bulk. You have to keep track of the cost for each item, set prices for items based on cost, then watch how long an item has been in your possession to see if you need to lower the price. There are also times when I purchase something, then realize it is damaged, I have to account for the loss of that item. I currently have quite a few spread sheets going, but I am trying to get the process streamlined. Once the business gets more profit, I would love to invest in an inventory tracking system or a POS. Something that will allow me to spend more time on the sales end of the business, rather then the accounting end.

This is a topic I will probably be delving into more. I have the publication 538, which is accounting periods, and methods. It has a lot more information on accounting methods available and rules to those methods. It is something I want to learn more about for my home business, and would love to share the knowledge I gain with anyone wanting to learn.

Designating the Tax Year for your small business

 This is the third installment on my posts for tax tips from the tax publications. The following is the information that publication 583shares about designating a tax year for your business. From reading it appears that most home businesses, or sole proprietors, will have the calendar tax year, but there are always some exceptions. 

 

Designating a Tax Year

You must figure your taxable income and file an income tax return based on an accounting period called a tax year. A tax year is usually 12 consecutive months. There are two kinds of tax years;

1. Calendar tax year- A calendar tax year is 12 consecutive months beginning January 1st of each year and then ending December 31st of the same year.
2. Fiscal tax year-  A fiscal tax year is 12 consecutive months ending the last day of any month except December. A 52-53 week tax year is a fiscal tax year that varies from 52-53 weeks but does not have to end on the last day of a month.

If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval.

You must use a calendar tax year if;   

• You keep no books or records
• You have no annual accounting period
• Your present tax year does not qualify as a fiscal year
• You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tag Regulations. 

If you have never filed an income tax return for your business, you can adopt either a calendar tax year or a fiscal tax year. Although, some partnerships and S corporations must use a particular tax year. See IRS publication 538 for more detailed information on this.

You adopt a tax year by filing your first income tax return using that tax year. You have not adopted a tax year if all you did was one of the following;

• Filed an application for an extension of time to file an income tax return
• Filed an application for an employer identification number
  
• Paid the estimated taxes for the year

Once you have adopted your tax year you may have to get the IRS to approve a change.  

All of these small tax detail will help you succeed in your business. Take the time to educate yourself in all aspects of your business, even if you use a financial advisor, you should still have some business finance education.

Taxpayer Identification Numers for the IRS

 This is the beginning of my home business tax tips. All of the information I am sharing in this blog post is coming from the 2021 IRS Publication 583. The majority of the tax information I will be sharing over the next few weeks will be more focused on Sole Proprietorships because that is what the majority of home businesses are. There will be many tips that will also be helpful for other forms of business as well, but my focus is more on the sole proprietorship business.

 Sole Proprietorship definition from the IRS publication

 A sole proprietorship is a unincorporated business that is owned by one individual. It is the simplest form of business organization to start and maintain. The business has no existence apart from you, the owner. Its liabilities are your personal liabilities. You undertake the risk of the business for all assets owned, whether or not used in the business. You include the income and expenses on your personal tax return.

 A taxpayer identification number is a 9 digit number issued by either, the Social Security Administration or the Internal Revenue Service, as a tracking number for tax purposes in the United States. Two of the most common forms of Tax Identification Numbers (TIN) are, the social security numbers that are issued by the social security administrative and the Employer identification number (EIN) that is issued by the IRS. You must have a taxpayer identification number so that the IRS can process your tax returns.

Taxpayer Identification Formats;

SSN xxx-xx-xxxx

EIN xx-xxxxxxx

Providing Your Identification Number to Others

You must include your taxpayer identification number, SSN or EIN, on all of your returns and other documents you send to the IRS. You must also give your taxpayer identification number to others who will use your identification number on any tax returns or documents that they will be sending to the IRS. This includes returns or documents filed to report the following;

• Interest, dividends, royalties, etc. that are paid to you.
• Any amount paid to you as a dependent care provider
• Certain amounts paid to you that total $600 or more per year.

 For example; If you sell more than $600 a year on Ebay, they have to report your earnings to the IRS and you will receive a 1099K. That is the same for many sites now. I know it was unusual when so many places started asking for your SSN, but the IRS required it. If you do not give these entity your identification number to these places, you may be facing penalties. 

 Employee Identification Number (EIN)

EINs are assigned to sole proprietors, LLC's, corporations, and partnerships for tax filing and reporting purposes. To apply for an EIN online go to irs.gov/businesses/small, then click on the Employer ID numbers link. The EIN will be issues immediately one the application information is validated. You can also mail or fax form SS-4. For international applications you can call 267-941-1099.\

You should apply for an EIN  early enough to receive the number by the time you must file a return or statement ot make a tax deposit. If you apply nu mail, file form SS-4 at least four weeks before you need an EIN. If you apply by telephone or through the IRS website, you can get an EIN immediately. If you apply by fax, you can get your EIN within four business days.

If you do not receive your EIN by the time a return is due, file your return anyway. Write "Applied for" and the date you applied for the number in the space for the EIN. Do not use your social security number as a substitute for an EIN on your tax return.

You should only have one EIN for a business entity. If you happen to have more than one and are not sure which one to use, contact the IRS center where you file your return.

This is some of the basics on the tax identification numbers, and information on how to get an EIN if your business requires one. There is more information about understanding your EIN in the IRS publication 1635. I hope me sharing these small bits of information will help you guys see where to begin. Sometimes trying to figure it all it is difficult, that why I am hoping to simplify some of this for anyone that has a home business.

 

Home Business Tax Help. Learning to make the most out of deductions! Tax Laws and Rules

 Small business taxes has always been an interest to me. I had done research on taxes for years. Yes, I know, I am weird. Taxes are not what most people do for enjoyment. Recently I learned that the Internal Revenue Service (IRS) has many different publications for everyone to get access to. I highly recommend you use a tax specialist for your small business taxes, but knowledge is power. I am going to be sharing some of the wonderful small business tax tips I have learned directly from the IRS publications.

The stack I received last week! My learning material. More than 30.

Over the next few weeks, or even months looking at how much material is in front of me, I will be sharing some of the home business tax tips directly from the IRS 2022 publications. So be looking out over the next few weeks for the tips you may need. If you have any specific questions that you want answered about your home business taxes, let me know. I will try to find out. I have been making money from home for many years, but up until the last two years, I only made a minimal amount to put on taxes. I have not made enough just yet to justify getting a financial advisor, or tax professional. 

 

Please always remember, I am not a tax professions, YET. I have my AAS Business, will be returning to University in August to study for my Bachelors in business finance and eventually become a financial advisor, and I am using all of these publications as education to share with anyone that needs help with tax tips for their home business. Please consult a tax professional if you ever need assistance.

To get your own Internal Revenue Services (IRS) publications click here!

Many Changes Since I started this Blog in 2009

 

I received a notice from Google about this blog and how the content does not meet their standards. It has for a few years, but something caught their attention. This made me curious, so I went back through all of my blog posts on My at Home Income Blog. After reading several of the posts I thought to myself, "Hey Google may be correct!". I was entertained by some of the posts I made simply to attempt to get traffic to sites that I used to write for, and others that had so many links that went to absolutely nowhere because of sites that have shut down. Most of the things I did as a home income in the beginning are not even available now. I went through and deleted a few posts and updated some links, there are probably still a few that are not great on here. Now I would like to share how so many things have changed since 2009 with a home income, writing online, and simple ways of earning a few dollars.

 

I was very big into writing for a variety of sites when I began this blog. There were quite a few that were very lucrative, but people were taking advantage of it an publishing mediocre work. For those of us who worked hard on their articles, it was devastating to lose so much income. Sites such as Ehow, Associate Content, Firehow, and many others have either changed the way they gather informative articles, or they have shut down completely. I have not been in the writing community for a while, but I am hoping to brush up on sites that allow for individuals to submit work. I do actually have articles on Hubpages, and have made a little money occasionally. I went from making about $1500 a month to not making hardly anything from my writing online. I made a big chunk selling them, but that was quite a few years ago.

Paid Per Click sites that I used are almost all out of business. The ones that are still in business, changed the way they paid or began offering different forms of payment. Unfortunately, Paid Per Click sites were never very lucrative, but it did help me pay a few bills or purchase some food through the years. It probably would not do that now. I am sure most would cost more in utilities to use then they pay.

 

So what sites are still paying after all of these years? There is only one site that I found in my late articles that still pays me, and I use it quite a bit. That site is Inboxdollars. I have used earnings from Inbox every Christmas for at least the last five years. It may only be $50 or so, but it is money earned in simple ways without much effort. It is not an income really, but a part of my Christmas savings plan. I use it in addition to a few receipt sites that I gain earnings on through the year. It has given me a total of about $500 the last two years to purchase Christmas gifts for my kids.

So, what now? Well in my previous post, Weeks Finds will be Official, you can read about finally opening up an Ebay store. The profits on the store has allowed me to profit a few hundred a month. Not a life changing amount, but enough to get by for now. Unfortunately i cannot work like I used to, actually not much at all. I enjoy doing the resell because it is something I can do on good days, and I can take breaks when needed. I am hoping to get my Notary License in the next week or so, which I can make a few dollars from home with that. Finally, I am returning to school to get my bachelors in Finance. I would also start to write more again. I may look into sites that pay for content, or I may just use this blog and my other blog Saving Money and Home Finances to publish writings that I enjoy. 

We will see where this all leads. Hopefully I can share more of my successes in the near future. With each avenue I take I hope and Pray for success and do the same for each of you.

 

 

 

Weeks Finds will be Offical

 

 I have been going back and forth on a business name. Weeks Finds has been the one that fits. It will be a business focusing on resale of items that we find through bulk buys, second hand stores, thrift shopping, yard sales, and any other methods that we can find items. This will be a home bases resale business based around discount products that we can find.

The business name, Weeks Finds, will be official soon. I put in for the DBA (Doing Business as) today and will get any licenses that I need in the next few weeks. In Arkansas, I should only need a resale license and the DBA. When you are starting any home business, be sure that you do research on the laws in your area. Not just for your state, but also city and county business laws.

What is Next for Weeks Finds?

As of right now I have purchased several bulk wholesale lots for resale. I am averaging at about 15-20% profit on those. The resale lot I have purchased are smaller boxes. There is a much bigger profit margins on larger lots, but there is also a much bigger chance of damaged products. So there is a chance of a greater loss. 

There has been several items we purchased from second hand stores and resale stores. So far I have not made a huge profit on everything in all, but I have made a big profit on a few items. One item that my Mom picked out was purchased for $2, I sold it the next day on our Etsy shop for $20. If I can continue that pattern the business would grown exponentially. 

Recently I made a trip to to acquire a huge lot of items from a deceased friend. These items were things that were either going to be donated, or trashed. So I took them under consignment. Some items may not sell, but in all it will be a profit for myself and the spouse. We agreed upon 50% of the profit split after all of the fees. In about a month, just the consignment, has profited over $300. Now, as of right now, that is the majority of my profit, but it is pushing my business forward. 

Open for Business!! 

 

 Weeks Finds is open for business on Ebay! We have a lot of items from movies, apparel, Elvis collectibles, vintage and more. This will be the main place for sales for our business. For items that I cannot sell online, I will sell at discounts through yard sales or Marketplace. 

Next, I will be putting together a plan to purchase more items. I have been considering starting to offer services to family members of deceased loved ones. Offer to help clean houses and find items the items of value to sell for them under consignment. It is just a thought in my head with many more, but I have a lot of empathy for people that have lost family members and feel that I could help them. 

Who knows where this will take my family. This business is finally giving me a big chance to work from home and be with my kids. They have been loving that their mom is home now. I do not have to leave them for 10-15 hours a day, sometimes seven days a week. This has still been work, and some struggles, but they are there most of the time. I am always available for them when I am needed, no matter what. 

Please check out our shop and let us know what you think.

2023 Starting off with a Profit! Positive Life

 

I am the type of individual that looks at everything as a sign of what is to come. I am also someone that enjoys the small achievements. So when I made a sale on my Etsy shop, WeeksFinds, today. I was excited. It is the small things in life that push me forward.

 OK, I am excited about making a sale on the first day of 2023 The sale was only $9 for a couple of V nickels that I listed a few months ago. It is a small sale for the shop, but for me it is the meaning. I believe that how you start the year continues, or even grows, through the year.

2023 is going to be a positive year for my home business, Weeks Finds and Makes. I am taking this day, and this sale as a positive step. I have a rejuvenation about growing this business. It has been something I have worked on for a while and it is finally coming together. I have a trip to New Orleans coming up this weekend, so Monday is going to be a new life for the business. I mean there will be a schedule put in place that I can adjust if needed. I am also going to put together a business plan fort myself. I am a goal oriented person, and I need a visual of what I am working for. 

I hope and pray that everyone that reads this posts finds peace and happiness in 2023. I do not mean that we will get everything that we need, I mean that we can find the positive in everything that we do. Staying positive will help us all succeed in our home businesses and our lives.