You may receive a form 1099-MISC from companies or individuals who paid you $600 or more. Even if you do not, you need to report your income. Consider keeping a list or spreadsheet to track income and expenses.
Expenses that are both ordinary and necessary for your business can be deducted from the income you generate. Keep a record of all expenses and keep your receipts in one folder or box. Depending on the nature of your side business, expenses may include supplies, travel, dues & subscriptions, insurance, telephone, etc. If you use your car for deliveries or sales calls, keep a log of dates, destinations, mileage, repairs & maintenance, insurance and purpose of each drive. As your side business grows, consider establishing a separate bank account for use only by the business. Depositing all business income and paying all expenses from one account can make tax time that much easier.
As always, let your CPA know about any changes in your income so they can keep you informed and up to date on your tax filings! We encourage our clients to reach out to us during the year – better to be informed and meet all filing requirements, than to incur additional penalties and interest later.
Honorine M. Campisi, CPA