This is an excellent suggestion. As I am working on a piece of
jewelry, your timely email reminded me that I must get on with
counting stuff. Ugh.
However, this industry, or arts in general is amok with urban
legends. I have a great tax guy and have been working with their firm
since 1986, since being a sole proprietor to an LLC. I was amazed at
the things I can deduct like my CD’s, my massages and the best one,
my entire college education. Since I had a tax id number BEFORE I
started school full time, I was selling a little jewelry and taking
classes in jewelry at adult ed. I was making a complete career change
from being a secretary to working in metals. Therefore, my entire
tuition became tax deductable within the law.
You are right about a good CPA. Filing our taxes every year is
EXPENSIVE but being in jail is more expensive.
The only time we ever had a problem with our taxes is when we did it
ourselves using Turbo Tax. Then I thought, if I didn’t expect my CPA
to make jewelry, why on earth would I think I was an expert in doing
taxes. However, we both became educated and involved in every aspect
of what was right and what was wrong. Deducting 30K of entertainment
expenses and making $400 of income is a waving red flag for the IRS.
Are you a hobby or business. One tip my CPA gave me was reporting
inventory each year. As tax free purchases were made with my tax id
number, those purchases must be accounted for, hence, reporting
inventory tells the IRS that yes, I am a business.
Leave the expert stuff to the experts.