Let's say there are two people, John and Joe, that want to run an Etsy shop together. They plan to be perfectly equal co-owners in that each of them will pay 50% of the expenses, earn 50% of the revenue, etc. The question is, when do they have to start filing taxes and how do they file it?
When do they have to file taxes? Etsy issues a 1099-K form to shops that reach $600 in sales, so does that mean John and Joe don't need to file taxes unless they receive a 1099-K form?
How do they file taxes? Several questions around this:
- Do they need to set up an LLC for their partnership? The main concern here is that an LLC requires an annual $800 fee, which most likely exceeds the net earnings from running the shop. So it wouldn't make sense financially.
- If no LLC, how should they report taxes? Is there a way to split up the 1099-K form such that both John and Joe pay half the taxes? Or should all shop earnings be reported under one person, only to have the tax payment split on their own? Any advice on dealing with taxes in a partnership would be much appreciated!
