Selling Online / Etsy

[jennieji]

I started a side job selling clothing on Etsy and through social media. I'm tracking my sales and expenses but was wondering if I was going about it correctly. I'm tracking all the inventory I buy each month along with my sales for the month. I often buy more inventory than I sell. So am I working at a loss for that month? And should I be setting aside a portion for taxes? If so, how much? 10-30%?

[JandKit · Accepted solution]

Hi Jennieji,

It is a good practice to track all sales and expenses as they are incurred. You are certainly doing it correctly. The final accounting for the year is at year's end. At that time, there will be an evaluation of your beginning inventory, any inventory used personally, and the inventory that remains at years end. That which is not sold at years end becomes the beginning inventory for the following year and is accounted for in the amount of income earned for the year. Based on the income that you do receive, consider setting aside an amount that can be used to pay your estimated taxes every three(3) months. The amount you decide to set aside is obitrary but  considering that the SE tax is 15.3% of your profit at years end, you'd want to pay close to that amount quarterly.