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Thread: Paying taxes on gecko sales?

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    Default Paying taxes on gecko sales?

    Does anyone know what the maximum of profit that you can make on gecko sales without paying taxes? I have always wanted to know when taxes start kicking in.

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    The IRS considers animal hobbies to be just that, hobbies. The one exception would be horse breeding mainly because of the sheer amount of money transacting in that hobby. The way it was explained to me is when your income starts to surpass the possible write offs that is when you would have to start worrying about declaring. You can declare small business and be in the red for several years before you have to report a profit as well, but those laws are subject to change in each state as well.
    The other time you would have to declare income on sales is if animal sales became your only income, then it is mandatory that you report.
    This is straight from my tax lady, obviously this could be different from state to state as well so you need to do your own local research too.

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    When we owned a hatchery (birds...), we had to pay taxes from the get-go as it wasn't a hobby farm, it was a profitable business, regardless of the amount made. I think it's a lot different when it's an actual business with registered name and partnerships and whatnot.

    My ex's exotic hobby farm was included in his personal taxes, but I'm not sure the details on that, I just remember it was included and he had deduction receipts and turned them in, but it was always in the red. It did have to be declared though.

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    it was a profitable business, regardless of the amount made
    Yes you are right, if you had a storefront and a business name and license yes you had to report regardless of the amount made. But as hobby folk like most of us there is no requirement to file. When you check into the possible write offs as a small business they are fairly substantial but it requires a lot of time and bookkeeping.

    If I were to put my name under a small business name in my state and pay for the small business license I could write off tons of things. Since the geckos are in my apt I could write off part of the monthly rent. I used the car to ship boxes so I could write off the mileage. Going to vend events the cost of tables and meals can be written off. Advertisement can be written off as well and supplies to run everything. It requires lots of accurate book keeping.

    Then at the end of the year what ever money is left you get to pay yourself a wage/salary for they year. There is nothing that dictates what that wage is. So say you have $50,000 in profit left over, you can ether pay it to yourself and report no profit for the business after paying the owner (you), or you can say you are putting it back into the business to build inventory and it won't be reported as profit ether. There is a time limit, I believe you have to turn a profit withing the first 6 years under that business name, however if you fail to do so you just liquidate your business and start again.

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    Yeah I've paid self employment taxes for 13 years so I'm well versed in all the annoyances of write-offs and not-so-accurate-but-i-get-by bookkeeping. Is the only thing I hate about being my own boss...the tax stuff I hate april, that's for sure lol

    I can deduct all my gecko and fish expenses as part of my main business because it is a general "pet business', (grooming and pet retail) so anything pet related can be written off under the main business, which is nice. I usually purchase anything pet related as cost of goods sold, and then "sell" the items back to myself as a personal client.

    That's an unusual situation though, not many would have the right kind of business to get by with that legally.

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    The IRS wants their money. This is not a state to state issue. I will leave it at that.

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    Quote Originally Posted by JJuchems View Post
    The IRS wants their money. This is not a state to state issue. I will leave it at that.
    You are incorrect actually. I have spoken to IRS reps several times on the matter. What I do right now with casual gecko sales is not something they care about, they point blank told me that they think of it as a hobby not a business.

    And yes the state small business licensing laws/guidelines and fees are different from state to state, so it is indeed a state issue and you have to check in with your state before you start up. Once you launch a state certified small business then you have to report your finances to the IRS. But you have to start at the state level to get started.

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    FYI: Starting this year PayPal and similar services are required to report earnings to the IRS.

    Here is some reading to consider:
    http://www.entrepreneur.com/money/ta...icle79510.html
    http://www.irs.gov/irs/article/0,,id=186056,00.html

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    Quote Originally Posted by JJuchems View Post
    FYI: Starting this year PayPal and similar services are required to report earnings to the IRS.

    Here is some reading to consider:
    http://www.entrepreneur.com/money/ta...icle79510.html
    http://www.irs.gov/irs/article/0,,id=186056,00.html
    Thank you for these great articles. This helps out a bunch.

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    My advice is this: If you are earning income from your hobby, start keeping track of your sales and expenses. Chances are your expenses are greater than your earnings, taking into account food, cages, supplies, reptile show expenses, mileage, etc etc.

    If your expenses are greater than your income then you are a hobby and not a business, and vice versa. If you register as a business and lose money (which you can do for I think 3 years) you can write off your losses and get a huge tax return. So if you have a regular job where you paid $3000.00 in federal income tax, and your business lost 3000.00 that year, you get all $3000.00 back that you paid in.

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