Anyone familiar with small businesses reporting earnings, etc?

You will need to check your states taxable income tables to find out what, if anything, you might owe. It depends on many factors. Is this your only source of income, are you going to be filing jointly with a spouse and your income will get factored into the whole, or as a single, head of household with an additional source of income/working income? I would suggest putting aside about 30% of your earnings and filing quarterly if you do make enough to be taxed. This way you won’t be hit with one large bill when you file and you will pay in smaller increments quarterly.

You don’t state where you live, but in most places it’s possible to automatically create a legal business by calling yourself <your name> Co. By doing this you don’t even need to register the business, as it’s automatically registered under your name. But the second you do this, all kinds of official wheels start turning and you’ll now be required to start filing business returns every year, even if you don’t actually do any business.

My advice is to use PayPal and just hide the income. Chances of getting caught are virtually zero as long as you don’t link directly from your PayPal account to your bank account. Spend the money directly from your PayPal account. It limits what you can spend this money on, but it also keeps the money away from the eyes of the tax man. And for the amount of money you’re talking about, the government really doesn’t care; the cost of enforcement would greatly exceed anything they’d get from you anyway, so they don’t look very hard.

Please ignore everything that @SmashTheState has written.

I can give you some pointers to help you get started. Let’s talk via PM.

I’m pretty sure if you are just a sole proprietor there isn’t much to do except report the income you make. Keep track of everything you buy, all materials, so you can subtract it from your earnings.

You could become an LLC, which is simple and costs maybe $50—$200 a year depending on your state, and create a business name. I doubt it’s worth doing that.

I would ask an accountant for advice if you start selling quite a bit of stuff. An accountant in your county will know if you might need a business license, or you can call the county for free.

People don’t usually need anything special if they are just selling a few things here and there.

Etsy might give you a report at the end of the year on how much you sold?? I don’t know. If they do, then it’s possible over a certain amount they have to report to the IRS.

I wouldn’t hide the income, especially if you are selling hundreds of dollars worth. No need to take the risk. You will have write-offs including deducting your electric bill and cable hook up.

Get a CPA, if you are the states, annual filing for taxes with may cost you a couple of hundred dollars. If you are in a state that requires you to collect sales/VAT taxes; you must file and send the money in sometimes monthly but it maybe only quarterly, open a savings account for only collected sales tax, keeping it separate will make sure you it when it is time to send in the money.
Don’t collect sales tax and not send it in, the Tax Department in one state I lived in, patrolled flea markets and craft fairs looking for the resale certificate or tax certificates, they issued tax liens on all the merchandise displayed, for people that were from another state and never sent filings or money for sales tax they were collection. One had a $2000 fine handed to him, many years of not paying. They would sometimes show up with police in uniforms from the local police department.

In this state you have to register your business name (DBA = doing business as) as a fictitious entity with the state and county. If selling a product that you create or buy wholesale, you have to get a sales tax license and collect/pay sales taxes collected to the state. You will have to pay your income taxes quarterly even as an estimated income. Other than that, the income taxes are fairly straight forward, just follow the 1040 instructions. Having a separate business bank account is a good idea since the IRS frowns on those who try to use their personal accounts in the biz.

Thank you for the responses!

Ugh, I wish I had known sooner that the cost of supplies would factor in on the tax end of things; I only have one receipt and that’s because there was a mistake and it needs to be fixed yet.

@Love_my_doggie I’ll shoot you a message some time this week. I have exams; just wanted to pop in and let everyone know I wasn’t ignoring them.