3 Accounting Mistakes to Avoid Selling on Poshmark
When you sell on Poshmark, you not only have to wear your selling hat, but you need to be something of an accountant too. Sounds intimidating? Don’t worry.
To help you out, here are the top three accounting mistakes that Poshmark sellers make.
#1: They Don’t Report Their Poshmark Sales on Their Tax Returns
Some people sell on Poshmark part time as a hobby. There’s nothing wrong with that. But they feel that because it’s a hobby they do for fun, they don’t need to report their income.
However, even if this is just a “hobby income”—you sell stuff in your closet, maybe for a friend—you need to report it as income. If you are selling on Poshmark as your main business, then you obviouslyhave to report it. If it’s income, then the IRS says you have to report it.
Poshmark currently does not send 1099 forms to sellers, but you can email them through their support center and ask them to send you a copy of your sales. Or you can easily track your sales by using a spreadsheet program like Excel. Whatever you do, don’t dismiss the tax issue just because you think you’ll get away with it. You never know if the IRS will decide to audit you.
#2: They Don’t Track Their Expenses
Keep track of everything you pay for—every single expense. Then you can check the IRS code to see if that expense is deductible.
Set up an expense spreadsheet. Mileage, for example, will be one category that you add to each time you use any mileage in your business. And there are a bunch of apps that you can use that will track miles for you, which makes things much easier.
Say you are out at the thrift stores and get a bunch of receipts. You can collate that information by using an app like Genius Scan. It makes it much easier then to put that information in your spreadsheet. Even just taking good pictures of your receipts and sending them to yourself is helpful. Receipts do fade!
#3: They Don’t Use a Separate Business Credit or Debit Card for Business Expenses
Do yourself a favor and make it easier on you to keep your personal expenses separate from your business expenses. And whenever you are out doing business, use that business credit or debit card. Not only does it make your accounting easier, using a separate business card may protect your personal assets should you get sued.
Bonus Tip: Relax
Everyone starts out small. You may be just getting your feet wet and are feeling a little
overwhelmed about the accounting end of selling on Poshmark.
Relax. Concentrate on tracking expenses on a monthly basis. Read up on apps that can help you get information on mileage and receipts. Get a spreadsheet going.
It may be a struggle at first, but there are others out there who have gone through the same thing. Don’thesitate to reach out to Facebook groups or other resources. Learn from the experience of others.
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