New IRS $600 Reporting Rule | More Taxes on Small Business & Side Hustles?

New IRS $600 Reporting Rule | More Taxes on Small Business & Side Hustles?

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in a previous video we talked about the irs  cracking down on small online sellers with   a new 600 threshold rule there were a lot of  questions about this and i also saw quite a   few misconceptions so i am bringing in  another expert to break this all down welcome to the Sewing Report I'm Jen and this  channel is all about making sewing and crafts fun   and approachable we're going to be doing another  business related video this one aimed at etsy   sellers and anyone with a small online business  so i'm really excited to introduce Mark Tew cpa   and you may know him on the internet as not your  dad's cpa welcome mark thanks happy to be here   quick disclaimer before we get into things this  conversation is for educational and entertainment   purposes only this does not constitute any type  of accounting financial legal or business advice   please advise a qualified professional in your  area i gotta get this out of the way i know your   branding is not your dad's cpa i would be totally  cool with the dad's cpa i don't know you do have   some dad vibes though and i think that's a good  thing so i just wanted to i just wanted to comment   on that yeah yeah i appreciate that so you are  you are a cpa tell tell us a little bit about   yourself your background and your youtube channel  which focuses on accounting and business finance   yeah so just real quick i mean my background is  in i mean i started in public accounting did some   time in corporate finance and uh you know i  was a cpa and i just decided that i should   go ahead and try doing the cpa thing you know  i started doing a little bit of tax on the side   preparing people's taxes and that just sort of  grew until eventually um you know i found myself   doing a lot of taxes for people who were  selling on etsy amazon ebay online sellers   i got into online selling a little bit  myself and after a while i just decided   i think this is a really good  niche i just want to make this my   specialty so for the past you know five six  years um i've just really been focusing on online   businesses online resellers and um yeah that's  what i do nice i started my youtube channel about   a year and a half ago now and that's starting to  get some traction i'm starting to enjoy it more so   i just i just like connecting with people  and helping them virtually online it's pretty   interesting because i've noticed this trend lately  on youtube of professionals coming to the platform   there's accountants lawyers all kinds of folks  helping people out with more everyday adult stuff   and i think youtube has really grown up from  the time that it was like animal videos and   like prank stuff now you get some very you know  serious people i help a realtor with her channel   and it's interesting just to see the shift from  more like frivolous entertainment related content   but now some of these business and finance  channels are just totally blowing up so that's   really cool and i think that's good because  this kind of content really helps people   versus you know some videos are just for fun but a  lot of people are looking for answers to questions   um so you did a video about a month ago and we  both did videos on this topic that the irs has   a new threshold starting this year 2022 where  any online payment processor like etsy paypal   venmo they're going to be required to report  any combined transactions of $600 or more in a   calendar year to the irs so your video  was titled pretty cleverly you're like   no more basically was like no more flying under  the radar so can you explain this this new rule   and uh we know that was part of the 2021 um  was it the american rescue plan act something   like that so explain what it is um and also you  know tell us like how why did you decide to do   a video on that i think it got like it's it's now  at almost 300 000 views were you surprised at that   i was pretty surprised i just thought it was kind  of like another random topic that just i mean just   as i think of things i'll make a video about it  i just thought it was gonna be like another video   that got a couple thousand views and that was the  end of it i just i kind of just thought it was not   a big deal but uh yeah it it blew up on my channel  at least relative to the rest of my videos and   in the comment sections you just get such a  wide variety of uh i like opinions yeah strong   opinions but yeah basically um so historically  the payment processors such as paypal um now ebay   managed payments or like whoever is processing  payment stripe they have been required to send   uh people who process more than twenty  thousand dollars worth of transactions   through their platform they've been required  to send them a form and that's the 1099 k form   so if you exceed that threshold of twenty  thousand dollars and two hundred transactions   this is 2021 and prior you would get this form  and the irs would receive a record of that as well   so then if you didn't report that income or if  the irs didn't see that income on your tax return   that was reported to them they could then follow  up with you by sending you a letter and say hey   we didn't see this on your tax form and  we calculate that you owe an additional   x amount of tax because you didn't report  this now we were talking about this before we   started taping but neither of us really knows the  origins of this new rule or like how it came to be   what politicians made this decision and why  it was in something called the amen like the   american rescue plan act uh because i think  there's been a lot of backlash about this and   a lot of people do not feel like this is helping  american people so it's pretty interesting   um because it was in a plan that was supposed  to help people during the pandemic and a lot   of folks especially the smaller online sellers  are there's a lot of um very upset people that   do not like this new rule have you gotten a  lot of like responses i know i was looking at   your your video and a lot of the comments are  pretty negative about this yeah so i mean the   thing is even though the big misconception  is that if you don't receive that 1099 form   that you don't have to pay taxes on it but the  reality is that any any profit not necessarily   income but any profit that you make selling stuff  online or really in any small business you're   going to owe tax on that but people thought oh i  didn't get a 1099 so i don't have to report this   that's what we wanted to clarify too is that the  like whether or not you get a 1099 from a company   like etsy or ebay or amazon that's not connected  in any way to whether or not you're supposed to   report and pay taxes on income right yeah so the  people who are really upset about it or are in a   way sort of self-identifying by you know saying  i wasn't paying tax on this and now i'm mad that   the irs is going to know about it be able to  pinpoint me if i don't kind of thing so if you   were already paying tax even if you were below the  threshold the fact that they lowered the threshold   which is what they did they lowered it from 20 000  down to 600 that that shouldn't really impact you   if you were already reporting it so um but yeah  there's a lot of people out there who didn't know   that they were supposed to report it there's a and  there are some people who are consciously flying   under the radar who will now no longer be able to  do that so um yeah it is it is kind of interesting   but yeah i mean that the government is spending a  lot of money and it doesn't just come from nowhere   you know they have to they only they have certain  levers that they can move and this is one that   they decided to to pull on and it affects a  lot of small business owners who who may maybe   i don't know don't like it exactly i'm seeing  a lot of comments online like on videos like   this or on i lurk a lot on reddit i don't  really comment because it's very scary there   but a lot of folks are like hey i've been doing  this as a hobby on the side just for extra   grocery money but if i have to report this income  track my expenses pay an accountant or get like a   bookkeeping service like quickbooks or something  i'm out cause it's not worth it from what i'm   seeing it does seem like this is really going  to kind of knock out a lot of those lower level   sellers that may only do 600 or a thousand dollars  a year because they're gonna be like this is just   not not worth it like if they were making a  thousand bucks income but not really having to   do that it kind of makes sense but it's not making  a lot of sense now to a lot of people who are not   high volume sellers so that's pretty it's pretty  interesting to see all the comments like that   yeah i mean there are i have seen those comments  and people are like if this is how it's going to   be then i'm done i mean i would want to explain  a little bit to those people that it doesn't   necessarily have to be that big of a burden i  mean i encourage people all the time just to get   a separate bank account maybe get a really simple  bookkeeping system or at least a spreadsheet   just to track i mean if you only have a few  transactions it's not going to be that difficult   to put together a picture of your total income  your total expenses or costs and then just take   a few extra minutes to list that out on your tax  return and tax time so i i mean i would i guess   i would encourage them to at least try it out  for a year or two before they just quit because   it could turn into something bigger it could  turn into you know a more profitable business   that ends up growing and you don't want to just  throw that away you know that's a good point and   what a lot of people don't realize too is that  even if etsy issues a 1099 k for say 1200 bucks   you're probably you probably have a lot of  business expenses that that would be deducted   so your total profit might be 200 and  then you might owe like 30 in taxes so   that gross number isn't the total net profit and  that's just what you need to be able to prove to   the irs and then you you know in many cases you  may be paying more taxes than you need to be   because you you haven't been keeping track  of all your expenses right off the bat what   do you tell people that are in this situation  like first steps what should they do from here   on out if they're in this situation where  they maybe haven't been reporting things or   thought you know filing where do you go from  here yeah i mean there's only so much you can do   as far as prior periods um as far as trying to put  together that picture of your income expenses so   let's say last year you didn't keep any records  i would just say well the goal is to put together   like a simple profit and loss statement so you  want your total sales for the year on the top   and then your you know your cost of goods sold and  your other you know office expenses all that stuff   to yield your profit or loss so to get your  sales if you were selling on etsy i think you   can go to etsy and pull a report of your total  sales for the year and then for your different   costs i mean you might have to reference receipts  that you might still have on hand you might have   to go through old bank statements or credit card  statements if you had cash transactions you might   just have to i mean the irs doesn't really like  estimates but worst case scenario i still think   you should maybe estimate those costs but then as  far as going forward yeah the first thing i would   encourage someone to do is just get a separate  bank account it doesn't necessarily have to   be a business account it could be a separate  personal checking account that you link your   your business transactions to and  that way you'll have all that stuff   there you know separate from your personal even  if you don't have any other bookkeeping system   that'll put you so much further ahead now i  have separate business accounts for all of my   business stuff what is the benefit to that and  what what are some of the consequences if you   co-mingle your finances even even if you don't  think you're not a business if you're like well   this is just personal stuff so it's not taxed  the irs doesn't see it that way they see you as   a sole proprietor that's what that's your business  entity by default and as a sole proprietor there's   no legal distinction between that business  entity and you it's kind of the same thing   so in that that's why i say you can have a  separate personal checking account but then   the next step if you want to be maybe a like a  step above in terms of legitimacy and liability   protection you would do it like an llc and in  that case you would want a separate business   account because that's where the liability uh  protection comes into play because if you're just   using if you if you're co-mingling your funds in  that case if somebody ever came after you from a   legal standpoint they could say well look you know  look at how you're operating your business you're   not even treating it like a business because  you're co-mingling your funds and that kind of   thing and they might be able to do what's called  pierce the corporate veil which means bypass that   liability protection and come after your personal  assets rather than being limited to your just your   business assets only and i'm not an attorney but  that's uh you know that's kind of how it works   that's the idea behind it that's a good thing to  bring up because i did get a few questions on at   what point you should like register a business  and there are a lot of people particularly on   etsy that consider it more of a hobby whereas  the irs might consider it a business so how   how do you make that distinction and what should  people know about the hobby versus business   factor yes so there is a difference tax-wise  between a hobby and a business but being a hobby   doesn't mean that you don't owe tax either it's  actually it's actually typically going to be less   beneficial for you to to operate as a hobby  because you're not allowed to take as a hobby   you're not allowed to take most of the deductions  like you can't claim your expenses as deductions   so you actually are incentivized to be a business  because then you you claim your income and you   can deduct most of your expenses as deductions  to yield a lower taxable profit so yeah so i   would say you definitely do want to be a business  because you have to report the income either way   it's gonna be more beneficial tax wise this is a  question i've been getting pretty frequently is   people want to know at what point should i go  through the hoops maybe register as a business   and go through all those you know legalities  versus maybe i just want to try to sell few   things on facebook do you have any advice for  people in the very beginning stages of that sort   of business venture as to when they should do that  or or if they need to yeah i would say typically   just start i mean it obviously depends on  your individual circumstance but most of   the businesses in the in the united states anyway  are sole proprietorships like that's what you are   by default and you know if you're selling crafts  or shoes or clothing online or something those   are typically not businesses that are very high  risk or you know high liability litigious that   kind of thing so you're probably fine if you have  a lot of personal assets that you want to protect   or if you're in some type of industry  that is a little bit higher risk then   an llc would be a good idea because that's the  main benefit it gives you liability protection   or sometimes you know like i work with a lot  of resellers who who work with wholesalers   and vendors and sometimes those wholesalers or  vendors won't work with you unless you are an llc   so that's another reason you might want to kind of  you know step up your legitimacy in their eyes and   then the last reason i like mentioning is if you  want to ever have an s corp which does have some   real tax benefits you first have to have an llc  or an or another entity in place first it's like   a stepping stone i did get a question about zell  and i'd seen in some articles that zell was being   included in the 600 threshold but then i saw some  information that it's not because it's apparently   a like bank transfer versus an online payment  processor are you seeing anything like that   because i that was an interesting thing that  a lot of media outlets were saying zell was   included but i'm seeing that it might not be yeah  so so my understanding is that it is not i don't   know what the technical difference is but the  the the payment processors who are subject to   to that requirement of sending a 1099 so they're  called payment settlement entities i think pses   i guess zell is not one if you look on their  website they say that they're not subject to   the requirements so that's that's pretty much all  i know that they're not going to be sending 1099s   you know because yeah i think you're right it is  mainly bank transfers it's typically not used for   um to remit payment for the sale of goods and  services so i think yeah they're not subject to   that and let's be real here i think the reason  people are asking is that folks are looking for   some loopholes what kind of advice would you give  to people that may be trying to get around these   rules and sort of still be under the radar is that  a good idea is that something they should avoid uh   yeah i mean it's it's not it's not technically  correct you know if if you're doing business   you can still probably use venmo personal rather  than venmo business or you can use paypal friends   and family rather than paypal business but i think  they'll probably put in place more controls to try   and track that stuff like if they see a lot of  high volume transactions coming through those   my guess is they'll they might shut it down i i  think they might already do that yeah i don't know   what to say it's definitely yeah you as a as a cpa  you probably can't advise people to to do that i'm   guessing um not advise that you're right no so  you probably have to keep your answers pretty pc   here so we we totally get it and the other thing  is that i want to talk about using all like cash   as a business now i talked about this with another  bookkeeper about people who are going to just try   to use cash and no electronic stuff uh any caveats  or you know maybe warnings about trying to operate   your business that way i mean there's no problem  with doing it unless you're doing it specifically   because you're trying to evade taxes which you and  i mean that's the irs doesn't take that politely   i can see i can see how they wouldn't so yeah  there are certain uh risks with that as well and   the other thing um Sarah Korhnak had pointed out  is that if your business is not on paper you have   no business finances she said one of her clients  was having trouble getting a mortgage because on   paper she had no income so that's a pretty that  was a pretty interesting point to bring up i think   and then you have no like say you're trying  to make your business bigger or anything   you you have no records of your income because  it's all done under the table so under the table   business can can have its own uh downsides as well  can definitely have its challenges that's for sure   without doxxing people have you had clients in  those situations before um not not too much i   mean i have had people sort of test the waters by  asking me like you know can i just like not report   these deductions or like you know because i'm  trying to boost my income so i can get a mortgage   and then i'll just amend my tax return and claim  that deduction again and reduce my taxes and like   that's not um that's not not okay all right that's  that's good to know good to know and uh what are   some of the common mistakes you're seeing small  business owners make with uh their finances   or taxes what are some things you see all the  time yeah i mean one of them is exactly what   we're talking about just failing to report your  online income because you didn't get a 1099.   so i'll typically maybe i'll get a new client who  that happened to the prior year they didn't report   it but then they're sending me the letter that  they got from the irs that's imposing a bunch of   new taxes for that income that wasn't reported  so then we have to go back and amend the return   and report that income and also report all their  deductions that's something i see quite frequently   and i mean the other one is just not not keeping  good records so again yeah whether you have just   a simple spreadsheet or even like a pencil  and paper as long as you are doing some kind   of system that works for you to keep track of your  business activity your transactions that's really   going to help you as a business owner just be in  tune with what is going on in your business with   your business profitability and it's going to also  facilitate your uh your tax preparation experience   so is this something you feel like a lot of  small online sellers might be able to handle   themselves or would you recommend talking to a  professional especially if it's for the first time   what do you think is the best way to go yeah it  could be either i think it just depends on your   comfort level you know some people are comfortable  with spreadsheets comfortable with numbers   you know are really detail-oriented and i see  a lot of those types of people do a pretty good   job yeah like if turbo tax can be fine like the  tax program any of that stuff can be fine but if   if you get turbo tax and you're doing it yourself  and you find yourself sweating as it is asking you   you know what what was your beginning inventory  or what was your home office uh square footage   and you're just like oh why is it asking me this  what if i mess up if you're really anxious about   it that that might be an indicator that you  know having somebody help you at least that   first year might be really beneficial and i  can say from personal experience so i've i've   done both i've taken my taxes to h r block and  then i've also done it myself online i would say   even h r block charges like like with all of the  fees and everything doing it myself was like 300   and then hiring a cpa was 500 in my opinion  it was worth it to spend the extra 200 bucks   and not have to do it myself so that's just my own  personal recommendation because that's the thing   you it's like when you go to the grocery store  and you have self-checkout you know i can you know   if i have to sell do this taxes myself for 300 or  get someone to do all the work for 500 i feel like   there's definitely some value there so that's my  own opinion so another thing i do want to ask you   about is uh the thing where people are wondering  if they're just selling old stuff on craigslist or   facebook marketplace or whatever um how do you  tell the irs that's not a business transaction   that's just you get rid of old stuff what do  you do in that situation yeah that's i mean   sort of a flaw in the system right now because  if you are selling it on ebay um that income is   going to be included in your 1099 number so what  you're going to have to do is just make sure that   you include it as income on your tax return but  you're also going to deduct the cost of that item   and the challenge there is you might not  remember what what the original cost was   yeah in that case you'll just have to use your  best estimate of either the original cost or   if the market value is lower then you might  have to use that and i have a video on that   that gets more into that detail but um  it's it's um it's not an exact science   so that that might help you feel a little bit  more comfortable with the uncertainty around that   yeah that can be tricky especially if you  if something's 20 years old you probably   let's be real you don't have a receipt for that or  if it's something maybe you were given like your   grandma's old stuff or something you know i mean  who knows with these things it can just get so so   complicated all right so i got a couple questions  here that i thought were were pretty good from   uh from viewers okay um as an llc can we make  investments in the products to sell in the future   like buying legos and i believe legos do have a  depreciating value so they're asking if they can   you know buy stuff with the understanding that's  going to gain value over time i think yeah sure   you can do that right cool all right um this is  interesting oh and later on we'll talk about sales   tax a little bit more if i buy at a thrift store  and pay their sales tax remake the close and sell   them do you also have to charge sales tax yeah  you might not i mean sales tax has to be charged   but you might not have to do it because most  of the platforms like if you sell on etsy or   poshmark or ebay they're going to charge that  sales tax on your behalf and remit it on your   behalf so yeah but even though you paid it already  so so you can deduct that just as the overall cost   that the sales tax that you that you pay becomes  part of the cost of the item that you can deduct   the cost of goods i've seen this i joined your  facebook groups i've seen a lot of talk about cogs   all right and the same person asks uh they're all  they're an upcycler customers provide the shirts   and i remake them are you supposed to be charging  sales tax so i guess so this would be more of a   service you know because um like one guy you know  he gets like vintage clothes cuts them up and then   kind of remakes them into something else that's  an interesting that's a good question if i mean if   you're selling a product typically the sale it'll  be subject to sales tax uh but then most services   i think states might be taxing more services now  but in general services are not as much subject   to sales tax because where i am i believe servant  i believe there's certain services that do have   tax um like i do video production work for someone  and there's no sales tax but if i gave this client   even like a flash drive a physical item then i  have to charge sales tax on the entire transaction   so you just have to make sure to keep everything  uh digital like a photographer wouldn't have to   charge sales tax but if they included a photo  album then they would so there's a lot of rules   and as it differs first date but i thought  that was an interesting question here's one   about reporting um now and i was going to ask you  this about registering with the irs and paying cor   estimated quarterly taxes one person wanted to  know does everyone need to do this what situations   should you and maybe you don't have to like say  you have a nine to five job and then you have a   like a side business too so like do you are there  certain situations you would say yes to filing the   quarterly stuff or or no yeah so when you are  self-employed the irs kind of wants you well   not kind of they want you to remit your taxes  throughout the year rather than waiting until   the end of the year but if you if you also have  a w-2 job you are having federal taxes remitted   throughout the year through your paycheck  so one thing you could do is just increase   the withholdings that you're having taking out  of your paycheck or maybe a spouse's paycheck   and that could potentially cover the additional  tax that's due from your your side hustle or your   your self-employment income job or yeah you could  just make manual estimated payments throughout the   year in addition to what's already being withheld  from your paycheck so in how much you remit or how   much you pay is just going to depend on how much  tax you're going to owe at the end of the year   so if someone does not have a regular  job they can do that with should they   pretty much always be doing the quarterly stuff  yeah depending on how much tax they're going to   owe and depending yeah there's all these different  factors like how much tax you're going to owe for   for this year and but you might not have to  worry about it depending on your prior year   tax liabilities so just it just depends on  your situation why are taxes so complicated   i know it keeps guys like you in business so i  i get it but like it just seems like things are   never easy to understand and they change year to  year and then everyone's all uh confused so that's   why i think your channel is is a good thing to  be on youtube okay so let's talk about sales tax   because i was getting some questions on a video  the video i did where people were mistaking the   sales tax etsy collects and remits with income  tax which is which is definitely different   yes some platforms will collect and remit the  sales tax but none of these platforms will will   withhold income tax right yeah so totally separate  things income tax is what we think of when we   think of doing your taxes every year that are due  on april 15th and we typically think of the irs so   that's the federal income tax and depending on  your state you might also have state income tax   and then sales tax is kind of off in its  own category and that's driven by you know   what you're actually selling your gross sales  number versus your profit which is what your   federal income tax is based on so so for folks  out there no etsy does not collect and withhold   the income tax for you so you guys have to keep  track of that that's why mark is here keep track   of your finances make sure you're reporting this  income paying taxes on it uh because yeah next   year do you feel like you're gonna get a flood  of business next year are you bracing yourself   um yeah i think so i think there's gonna be a lot  of surprised uh sellers who who still really don't   know what's coming you know they don't they're  not even expecting to have to pay taxes on it   there's gonna be a lot of surprise when people get  these 1099s yeah i don't it'll be interesting yeah   i think there'll be a little whole new influx  of uh people in new york just out of curiosity   have are you you've posted uh some stuff on your  instagram stories you've been getting flooded   with messages and in emails and stuff are you  noticing some like common themes as far as the   panic goes it's it's kind of the same the same  things that i'm used to seeing but maybe just   a little bit more of it uh there's just a lot  of misconceptions surrounding getting audited   you had one person that said they couldn't sleep  at night because they got like a letter from the   irs saying they were probably gonna get audited  but then you posted a follow-up saying this really   isn't a big deal so what happens when you do get  audited and how do you deal with it if somebody   faces that situation yeah i mean this this um  this lady sent me an email and it was really   a perfect example of what i talk about sometimes  which is people like literally lose sleep because   of their anxiety about taxes i mean she was saying  that she would sit out the window and you know   look out the window and hope the fbi wasn't coming  to her door or something so that's kind of on   the extreme end but i had her send me a letter of  the the audit notice that she got and it's it was   what i expected which is they typically say hey  you've been selected for an audit we want to look   at these two or these three categories and in her  case they wanted to look at total gross receipts   medical expenses and office expenses so one  was personal and two related to her business   and and all you have to do in that situation  is submit basically a detail that show the the   detail behind the numbers that you claim on your  taxes and then the audit goes away i mean it could   really be just you know one or two interactions  by by mail and then that's it it's not somebody   coming to your house and just you know you're not  going to get arrested or taken away to debtors   prison or anything like that so it's done like  snail mail not like electronically i'm just i   always wondered what happens when you get audited  not that i want an audit but please irs if you're   watching this please i'm i'm good i'm good man  yep yeah they're they're still a few years behind   it's all by mail so if somebody emails you or  calls you uh that's a high risk indicator of   you know might be not be the irs so you have  to literally physically mail everything in   yeah sometimes they let you fast or like there's  no like website where you can upload documents or   anything that seems so technologically outdated  i don't know is that the way the irs rolls   pretty much have you worked directly with people  at the irs in the past with clients like what   was that like not really i i actually there are  some firms who will call the irs a lot on behalf   of their clients i try to avoid that as much as  possible just because it takes so long i i was on   i think i was on hold for like four hours the last  time i tried to call them just being passed around   and trying to get something done so yeah okay  so so a typical government type response okay no   no so or like any corporate you know like when  you call a credit card company and then you talk   you talk to the ai for a while and then your you  know your whole day has gone by um do you have any   tips for uh small business owners on how to maybe  avoid audits or maybe like avoid red flags that   the irs might see yeah i mean a lot of audits are  just randomly selected so that's not something you   can necessarily avoid but then like jury duty okay  yeah i mean that's some of them but then the there   is a portion also that are uh you know if they see  something that looks way out of out of the norm   you might be flagged for an audit that's that's  not the case with things like people are like well   i can't show a loss because then i'll get audited  or i can't claim the home office deduction because   they're not audited those things are not red  flags like businesses have losses all the time   you know millions of people are eligible for and  claim the home office deduction like that stuff is   if you have a legitimate expense that you can  claim as a deduction you should absolutely do it   don't forgo the opportunity to claim a deduction  just because you think you're going to get audited   that is very good to know another point of  confusion has been that there was some talk   about lowering the threshold for banks reporting  transactions like currently i believe it's ten   thousand dollars and then there was talk about  six hundred dollars but that went away so a lot   of people were confusing those two things because  they were both for six hundred dollars but have   you heard the latest on the bank reporting no no  but but yeah that that is a good point that that   people were confusing those two things a lot i got  kind of an angry comment they're like you're like   they were telling me i was wrong and they're like  you know that hasn't been passed yet and that's   for banks i'm like no no this is they're two  separate things uh one this this 600 irs threshold   for online payment processors is definitely an  effect that's there's no talk of that the bank   thing was a totally separate issue but i think  because they were for the same dollar amount   people conflated them and thought they were  the same thing but will it have an impact if   the united states decides to lower that 10 000  threshold um because now all bet then all bank   activity will be tracked below a certain  amount because that'll be interesting   yeah i don't know how that would work i mean  because then the banks would have to report   transactions above a certain amount that hits your  bank even if they're not necessarily income so   yeah i don't know and the other thing that people  confuse a little bit too is you know if i pay a   contractor over 600 during the year i'm supposed  to send them a 10.99 it's a 1099 nec non-employee   compensation form but but that's another one that  people are confusing with this other 600 threshold   that with with um online payment platforms let's  be real people are very confused about taxes and   also i did get some questions about what people  need to do when they actually file their taxes   and i know you've talked about this a lot on your  channel but they need to file usually it's like a   schedule c right along with their regular tax  stuff yeah i mean if you're using a program to   prepare your taxes it'll walk you through that  and automatically fill out that form but that's   what it is it's just um it's a separate schedule  of your individual tax return so it's a schedule c   of your individual form 1040. man well this  year is going to be a trip i think mark   uh is there anything we have not talked about yet  that you think might be helpful for this audience   to know about i think we've touched on you know a  lot of the important areas just um making sure you   keep good records i talked about estimated taxes  i think one of the biggest things to remember is   just it's usually not as complicated maybe as  you think it is or maybe not as serious like   you're not going to go to jail you know there's  not as much reason to panic as you might as you   might think okay yeah it's like when you see and  that's the thing when you see stories about people   getting arrested for this type of thing that's  a pretty extreme example you don't hear about   all of the very normal situations because that's  not exciting so you don't see your local media   reporting on all the people that did their taxes  right or just had a small penalty um in a lot of   these situations it does seem like yeah you might  have to pay a penalty if you got something wrong   but you're not going to go to prison or anything  like that so it's not anything super scary all   right so let's talk about your uh platforms now  you you've been really busy lately and i know   tax season is uh coming up if uh you let's bring  up your uh your youtube channel so mark is at not   your dad's cpa and he has tons of videos about  all things tax and business related so if your   question has not been answered i would definitely  recommend you check out mark's channel mark what   are some good ways if people want to learn more  more from you uh what what kind of stuff where   can you point them if they want to get more mark  mark and not your dad's cpa yeah so definitely my   youtube channel i have a facebook group called  accounting for online sellers that you can join   and there's a pretty uh helpful community we have  in there who will answer your questions i'm in   there a lot and then i also have a tax course  that that focuses on online businesses online   resellers that's called reseller tax academy  um and it's really just about helping you to do   all the things you need to do throughout the year  that are gonna optimize your tax situation because   there's only so much that can be done if if it's  tax time and you haven't been doing those things   so um yeah that's that's typically where i will  point people who want to get pointed in the right   direction yeah very cool and i also notice you  do a lot of q a live streams so subscribe to   the channel and follow uh not your dad's cpa on  facebook because you do the live streams i think   in both places so if you have some questions that  you think mark could could answer yeah and your   course looks pretty cool i was looking and you did  you do have some promotions every once in a while   so sometimes the course is on sale what kind of  things will people learn in the uh reseller tax   academy like just you know basic business stuff  yeah i mean what what types of tax we're subject   to you know um all about different deductions  that you should know as an online business   you know how to clean up a tax mess i'm sure  you get you've probably gotten a few of those   yeah yeah i mean there's a whole module kind of on  the on the bookkeeping and accounting foundation   piece because if you don't have that in order then  there's really not a lot you can do i mean you got   to have that solid foundation that you can build  on with the tax piece i tell people it's kind of   like if if you don't brush your teeth all year  and then you go to the dentist like there's only   so much work there's only so much they can do  to minimize the damage but if you're doing all   the stuff you need to do throughout the year  brushing flossing all that stuff you're in a   much better position from a tax perspective at the  end of the year like those savings will already be   sort of in place for you to take advantage of then  it makes tax time pretty pain free if you if you   do all those things well thank you so much for  being with us and i'm going to link all of mark's   socials and website down below in the description  box i do think your stuff looks really cool and   you also have a reseller business starter guide  that people can download for free so you have a   lot of free research i do want to uh just warn  people mark's been really busy so i might avoid   like trying to dm him on instagram or emailing  him directly try to join one of his live streams   or take the tax academy because i did notice  on your website you said you were all booked   up for like tax consultations right so you've  been pretty you've been pretty slammed yeah i   mean there's yeah that's yeah it's it's tough i am  like selectively accepting clients for a for tax   preparation that kind of thing but my one-on-one  consultations i do close those down during tax   season for the most part but uh but yeah i mean  i'm i'm happy to help where i can very cool well   thank you so much and guys uh feel free to leave  some comments below again if you have questions   though i would encourage you to go over to mark's  socials and show him some love and also because i   i obviously cannot answer your tax questions here  that's why i had an expert on but thank you guys   so much for watching and if you haven't checked  them out yet i also did another interview with a   different small business bookkeeper small business  there and i also did a video about my own etsy   shop and everything i had to do to get started  so check out the video as well i'm jen with the   Sewing Report i'll see you guys again in the next  video remember whatever you're doing make it fun

2022-01-30 06:48

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