At the end of the year, you are going to tally all of the revenue you have made and then subtract all of the expenses - this should give you a fairly accurate amount as a net income from your craft show business. This is going to be the amount that you will pay tax on.
So, what can you do to limit the amount of tax you pay on your craft show business? Here are three tips you can use:
Keep track of ALL expenses - Everything from the lunch you had to purchase at a craft show to the fees for running a website - if it is related to your business, then you need to make sure you include it as an expense of running the business. By being diligent with the receipts you save, you can reduce your taxes a great deal at the end of the year.
Hire a tax professional - It might cost you a few dollars to hire someone to do your taxes, but it sure beats having to do them on your own. Tax pros know most of the ins and outs of the taxation business and therefore they can really help you with ways you can save on your taxes. They may suggest different methods of sheltering your money or deferring money made from craft shows - all in order to help you save money that you would otherwise have to pay to the tax man.
Make donations, contributions, etc - Put money away into a retirement savings plan; give money to the Heart and Stroke Foundation during the year - anything! All of these things give you that added tax advantage, and they allow you to either build for the future, or help a good cause. Talk with your tax professional or financial plan about how you can take advantage of these opportunities.
If your crafts are big sellers on the craft show circuit and you have a great profit margin built into your crafts, there is a good chance that you are going to make a nice profit at the end of the year. That's the part you will have to pay taxes on - and it is just a part of doing business.
One last tip: I would advise setting aside some of the wonderful profit you are making every year to pay when tax time arrives. You don't want to have to try and come up with the money on the spur of the moment - it's just easier to take it off the top of the profit and make the payment when you need to!
Natalie Goyette shows you how to make your craft show business profitable in her best selling ebook: Craft Show Success Secrets. Visit her site: [craftshowsuccess.com parked domain].
Learn more at amazon.com