Need help with Schedule C for online clothing business as a sole proprietor

You're on the right track! For your online clothing business, Schedule C is indeed what you'll need as a sole proprietor. For documentation, you should keep ALL receipts for inventory purchases as well as other business expenses (shipping supplies, platform fees, etc.). You don't necessarily need to match each receipt to a specific sale, but you should have documentation that supports your total cost of goods sold. Many clothing resellers keep a simple spreadsheet that tracks inventory costs and selling prices, though this isn't required by the IRS - just helpful for your own records. As for business structure, sole proprietorship is usually the simplest and most cost-effective for smaller businesses like yours. Once your profit reaches about $30,000-$40,000 annually, it might be worth considering an LLC taxed as an S-corp to potentially save on self-employment taxes, but that comes with additional costs and paperwork.

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I've been selling clothes online for about 3 years now. For inventory, I keep a simple spreadsheet with: - Date purchased - Brief description - Purchase price - Sale price - Platform fees The IRS has never questioned my COGS (Cost of Goods Sold) deductions with this system. As for business type, once I hit about $25k profit, my accountant suggested an LLC taxed as S-corp to save on self-employment taxes. It costs me about $800/year more in accounting fees but saves me roughly $3k in taxes, so worth considering as you grow!

Has anyone tried using the simplified home office deduction ($5 per square foot up to 300 sq ft) vs itemizing all home expenses? I'm trying to figure out which would be better for my clothing reselling business... I use about 150 sq ft for inventory storage and photography.

For your situation with $11,500 in sales and $6,700 in expenses, you're definitely on the right track with Schedule C as a sole proprietor. That puts you at about $4,800 in profit, which means you'll owe self-employment tax on that amount (about $679). A few specific tips for clothing resellers: - You can absolutely keep purchasing receipts together rather than matching each item individually. The IRS cares about your total Cost of Goods Sold, not item-by-item tracking. - Don't forget to deduct platform fees (eBay, Poshmark, etc.), shipping supplies, storage containers, and even a portion of your internet bill if you use it for business. - Consider opening a separate business checking account - it makes tracking so much easier and looks more professional if you ever get audited. At your current profit level, sole proprietorship is definitely the most cost-effective structure. The extra complexity and costs of an LLC or S-corp wouldn't be worth it until you're making significantly more profit. Keep good records and you'll be fine!