Author: christine

We made it through tax week at Cutting for Business! If you missed any posts along the way, I talked about sales tax, an overview of taxes, tax deductions, and I shared a printable tax preparation list. Today, I’m sharing print and cut Silhouette Cameo calendar or planner tax reminder stickers. As I mentioned, the fees can be quite high for filing your tax returns late – so I’m making sure that you are right on time!

This file is for personal use only and cannot be sold or uploaded elsewhere. Enjoy!

Silhouette users can download the file in .studio3 format here.

Let’s keep talking taxes! (I know, you are probably groaning right now, but this stuff is important!)

Whether you are filing your taxes yourself or bringing them to a tax professional, I’m offering you a printable checklist of everything you need to have on hand before you begin.

Download the Printable Tax Checklist here.

As we continue on talking about taxes on the blog (see this post and this post if you are a bit behind), we are going to look at a list of common tax deductions in your Silhouette or Cricut business.

Tax deductions are expenses that your business has encountered throughout the year. You use deductions to reduce the taxable income that your business has had throughout the year – thus allowing you to pay less in taxes at the end of the year.

Two Kinds of Deductions

For some deductions, you take the entire value of the deduction at one time; while others you take a portion of the deduction over several years. For example, you may take a deduction of $40 for vinyl you recently purchased. However, since you will continue to use your machine throughout several years, your machine depreciates and you take smaller deductions over the useful life of your machine.

Common Tax Deductions in Your Silhouette or Cricut Business

• Supplies – Vinyl, paper, glue, transfer tape, weeding tools, blank products, and so on.
• Machines – Cameo, Curio, Mint, Cricut, Alta, Glowforge, heat press, postage scale or printer, computer you purchased for business use, or camera and related photography equipment.
• Software – Like Silhouette Studio Designer or Business Edition Upgrade, fonts, and designs.
• Books – Any book you’ve purchased to better your business or to improve your skills (like Diving In: 30 Days to Your Silhouette Business – shameless plug to one of my books).
• Insurance – Business insurance.
• Event Entry Fees – Like those from craft shows or fairs.
• Home Office Overhead – The space in your home you use for your business, internet, electricity, water.
• Legal Fees – These include attorney fees from setting up your business, trademarking your designs, registering copyrights.
• General Office Supplies – These would include envelopes, tape, pens, pencils, tacks, staples, file folders, and so on.
• Postage and Shipping Supplies – Don’t forget about boxes, envelopes, tape, packing peanuts, bubble wrap, and labels.
• Advertising Expenses – Including promoted listings on Etsy, Pinterest, Facebook, Google Adwords, and print materials including business cards or post cards.
• Tax Preparation Expenses
• Accounting Expenses – Including monthly accounting subscription, or the costs related with hiring an accountant.
• Phone expenses – Cell phone bills, phone, phone apps for your business.
• Travel Expenses – You can deduct things like gas, lodging, food.
• Start Up Costs – Usually, you can deduct up to $5,000.
• Credit Card Processing Fees
• Display Materials and Photography Props
• Charitable Donations – This includes product donations for fundraisers.
• Health Insurance Premiums
• Childcare Expenses.
• …most things that you have purchased for use in your business can be taken as a tax deduction.

Whew, that’s a lot of deductions! When taking deductions related to your Silhouette or Cricut business, the IRS will not ask for copies of each receipt. However, you are required to keep your receipts on file, either digitally or hard copies. Personally, I keep paper records in binders.

Let’s continue talking taxes here on the blog. I’ve already shared with you what the IRS says about business income versus hobby income. Missed it? Read that post here.

Today, we are going to look at Federal and State Income Tax and Self Employment Tax in your Silhouette or Cricut small business. To clarify, I can’t provide specific answers for your tax questions since I’m not a licensed tax professional, but I’m happy to provide you an overview of the taxes you’ll encounter in your Silhouette or Cricut small business.

Federal and State Income Tax

• In general, when you make money you need to pay income taxes. I’m sure most Cutting for Business readers have been employed and have received a W-2 at some point in their lives. At tax filing time, you use the information on your W-2 to report to the government how much money you earned during the year. When you work for yourself, no one sends you a W-2. Instead, you add your net sales income to all your other income and report it to the government on your Federal Form 1040 or your state income tax return.
• Not all states have income tax. These states include: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
• Federal and State Income taxes are filed annually.
• Similar to filing your personal taxes, you will offset your taxable income with your business deductions.

Federal Self Employment Tax

• In the USA, there is a 15.3% Self Employment tax. The purpose of the tax is to collect Social Security and Medicare taxes from those that are self employed. Of the 15.3%, 12.4% goes to Social Security; while 2.9% goes to Medicare. In 2020, you will pay 15.3% of the first $137,700 in income. For earnings over $137,700 you are taxed at 2.9%; the income amounts change yearly.

How are Small Business Taxes Filed?

For those with sole proprietorships or single member LLC’s (which are what the majority of Cutting for Business readers will be established as), you will file your taxes on your personal tax return (Form 1040) or your state income tax form.

1099-K

If you sell through marketplaces (Etsy, Ebay, Amazon)  you may receive a 1099-K. For this to happen, you must have $20,000 AND more than 200 transactions. This form simply states what your unadjusted gross sales were within the marketplace.

See, this tax stuff isn’t really that scary! I do know this tax stuff can be pretty dull, but have faith and get your tax documents in order sooner rather than later.

In addition to all the recent talk about Federal and State taxes over the last few weeks, let’s switch over and talk about Sales Tax.

What is Sales Tax?

Sales tax doesn’t cost your business anything. Instead, you act as the middleman and collect sales tax from your customer and submit it to your state. Additionally, Currently, for items sold online and shipped to customers out of your state (or out of a state that you formally do business in) – there is no sales tax. When selling to a customer in your state, you will need to charge them sales tax.

How to Collect Sales Tax and How Much to Charge?

To begin collecting sales tax, you will need to register with your state’s Department of Revenue. Registration can generally be done online. 

The sales tax amount that you charge will vary depending on the state you live in and the sales tax structure that they operate upon. Some states use an origin based rate (tax amounts are determined by where you live); while others use a destination based rate (tax amounts are determined by the destination of the buyer). In addition to the state sales tax rate, your county or city may have additional sales tax surcharges. For example, in my home state (Florida) the sales tax rate is 6% and my county (Osceola) has a 1% county surcharge for a total sales tax rate of 7%.

How and When to Submit Sales Tax?

Again, your state’s Department of Revenue will be able to provide you specific details on submitting your sales tax. In many states, new filers pay sales tax quarterly – but other common sales tax due dates are monthly or yearly. Some states will provide on time filers with a credit for filing on time, while others have high late fees for filers who don’t file on time.

What States Don’t Have Sales Tax?

There are always exceptions! Five states in the USA have no sales tax: Alaska, Montana, New Hampshire, Delaware, and Oregon. If you live in one of these states, you may still have tax responsibilities in other states. Read more about this in this post.

Too Busy to File Sales Tax?

Too busy to worry about sales tax filings? I hear you! I use (and love!) a service that does this automatically for me. Read my full review in this post.

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