Are you pursuing a hobby, dabbling in a side hustle, or running a full-fledged business? In the ever-expanding world of e-commerce, countless individuals have tapped into online sales as a lucrative avenue to supplement their income. From crafting handmade items and selling digital products to offering consulting or coaching services, the possibilities are virtually endless.
Historically, occasional sales like those at a yard sale were not taxed, much like the early days of online sales. However, the landscape has shifted dramatically. Recent legislative changes mean that if you’re earning over $600 annually from online sales, you’ll now receive a 1099-K form from your payment processors—be it PayPal, Venmo, Cash App, Etsy, or any other platform. This new mandate requires these companies to report any earnings that cross the $600 threshold.
So, what does this mean for you? Simply put, any income above $600 from your online activities must now be reported on your tax returns. This shift brings about a crucial question: Are you running a business or maintaining a side hustle?
As a professional bookkeeper and business consultant, I’m here to help you navigate these waters. Determining the nature of your online activities is more important than ever. Whether you’re looking to grow a business or just earn some extra cash, understanding your tax obligations is key.
If you’re unsure about how to classify your endeavors or manage this new tax requirement, don’t hesitate to reach out for tailored advice and insights. Let’s make sure your passion pays off—smartly and legally.
