How do I file taxes for my new E-commerce business selling clothing designs?

You'll need to report this income on your tax return regardless of whether you receive tax forms from the platforms. For TeePublic and similar platforms, they're required to issue a 1099-K if you exceed $600 in sales for the year (this is the current threshold). PayPal is also required to issue 1099-K forms under the same threshold. Even if you don't receive these forms (maybe you earn less than $600), you still legally need to report all income on your tax return. You'll report this on Schedule C as self-employment income. The good news is you can deduct business expenses against this income - things like design software, computer equipment used for your designs, website costs, etc. You'll also need to pay self-employment taxes (Medicare and Social Security) on your profits using Schedule SE. I'd recommend keeping detailed records of all income and expenses from day one - makes everything much easier at tax time.

Hi there! I was in your EXACT situation last year when I started selling custom phone cases online. I was so confused about taxes I almost gave up before I found taxr.ai (https://taxr.ai) which completely saved me. It's basically an AI tax assistant that analyzes your situation and guides you through everything. I just uploaded screenshots of my PayPal reports and some expenses, and it told me exactly what I needed to file (Schedule C, Schedule SE, etc.) and even calculated my estimated quarterly payments. What I loved is that it explained everything in normal human language, not tax jargon. It even caught deductions I had no idea about - apparently my home internet and part of my phone bill counted as business expenses!

I was super skeptical about taxr.ai but finally tried it after struggling with my Etsy + regular job tax situation. It was actually pretty impressive - uploaded my PayPal statements and W-2, and it broke everything down clearly. Found legitimate deductions I hadn't considered (portion of my internet bill, phone, even some home office stuff). The best part was the quarterly tax payment calculator that showed exactly what I needed to pay each quarter to avoid penalties. Used the guidance alongside TurboTax and everything went smoothly. Definitely less stressful than the previous year when I guessed at everything and ended up owing way more than expected.

If you're getting serious about your e-commerce business, you'll eventually need to talk to the IRS (trust me, I learned this the hard way). After wasting DAYS trying to get through on their phone lines, I found Claimyr (https://claimyr.com) which is basically a miracle service. You can see how it works here: https://youtu.be/_kiP6q8DX5c They somehow get you through the IRS phone queue in minutes instead of hours. I had questions about quarterly payments for my print-on-demand business that weren't covered clearly online, and I was able to talk to an actual IRS agent who walked me through everything. Saved me from potentially paying penalties for doing my estimated taxes wrong.

Need to publicly admit I was WRONG about Claimyr. After my skeptical comment, I decided to try it while dealing with an IRS notice about my e-commerce income reporting. Got connected to an IRS agent in about 12 minutes when I had previously spent over 3 hours trying on my own and never getting through. The agent cleared up my confusion about how to properly document my online sales across multiple platforms. Turns out I was overthinking it and potentially over-reporting some income. This service literally saved me money on my taxes and hours of frustration. Sometimes good services actually exist!

Don't forget about business licenses and sales tax! Depending on your state and what you're selling, you might need a business license and to collect sales tax. When I started my Etsy shop, I had to register with my state's department of revenue and get a sales tax permit. Most platforms like TeePublic handle the sales tax collection for you, but double-check their terms. And some cities/counties require business licenses even for small home-based businesses. Worth looking into before you get too far along!

I've been running an etsy shop for 2 years. My advice: save 30% of everything you make for taxes. Better to have extra money left over than be caught short. I use QuickBooks Self-Employed ($15/month) to track everything and it automatically calculates my quarterly payments. Also lets me categorize business expenses super easy.

Hey Beatrice! I started my print-on-demand business about 18 months ago and went through the exact same confusion. Here's what I wish someone had told me from the beginning: 1. Yes, you're now self-employed! You'll report your income on Schedule C (Profit or Loss from Business) and pay self-employment tax on Schedule SE. 2. For TeePublic specifically - they'll send you a 1099-K if you make over $600 in a year. But here's the key: you need to report ALL income whether you get a 1099 or not. 3. PayPal will also send you a 1099-K if you process over $600 through them. Sometimes you might get duplicate reporting between platforms, so keep good records to avoid double-counting income. 4. Start tracking expenses NOW - design software subscriptions, computer equipment, internet bills (business portion), phone bills (business portion), any courses or books about design/business. These are all deductible against your business income. 5. Open a separate business checking account if you haven't already. Makes everything so much cleaner for record-keeping. The most important thing is to save about 25-30% of your profits for taxes. Since TeePublic won't withhold taxes like a regular employer, you're responsible for paying both income tax and self-employment tax (Social Security/Medicare). Good luck!

Great question! I just went through this exact situation last year when I started my print-on-demand business. Here's what I learned: You're absolutely right that this makes you self-employed. The key thing to understand is that you'll need to file Schedule C (business income/expenses) and Schedule SE (self-employment tax) along with your regular 1040. Regarding PayPal and 1099-K forms - yes, both PayPal and TeePublic should send you 1099-K forms if you exceed $600 in transactions for the year. However, you're required to report ALL income regardless of whether you receive these forms or not. Here's my biggest tip: start keeping detailed records immediately! Track every penny of income and every business expense. Business expenses you can deduct include: - Design software subscriptions - Computer/equipment used for business - Portion of internet/phone bills - Marketing costs - Any business-related courses or books Also, set aside about 25-30% of your profits for taxes since nothing is being withheld automatically. You may need to make quarterly estimated tax payments if you expect to owe more than $1,000 in taxes. Consider using a simple accounting app like Wave (free) or QuickBooks Self-Employed to track everything. It makes tax time so much easier! Feel free to ask if you have more specific questions - happy to help a fellow entrepreneur!

Just wanted to add something that might help since I've been doing print-on-demand for about a year now - make sure you understand the difference between gross income and net profit when it comes to taxes! When TeePublic sends you that 1099-K, it will show your total sales (gross income), but you only pay taxes on your actual profit after expenses. So if you made $5,000 in sales but had $2,000 in legitimate business expenses, you only pay taxes on the $3,000 profit. This is why tracking expenses is so crucial - it can significantly reduce your tax burden. Don't forget about less obvious deductions like: - Packaging materials if you ship anything yourself - Photography equipment/props for product photos - Business cards or promotional materials - Even mileage if you drive to buy business supplies One more thing - consider getting an EIN (Employer Identification Number) from the IRS even if you're a sole proprietor. It's free and makes you look more professional when setting up business accounts. Plus some payment processors prefer it over using your SSN. Good luck with your clothing design business! The tax stuff seems overwhelming at first but gets easier once you establish good record-keeping habits.