Self Employed Side Business

[jkbentley]

I work in TV/Film and because of the strikes, I started a sewing business from my home.  I registered with the county (Delaware County in New York) as a sole proprietor/DBA as I don't have any employees.  Would it benefit me to get an EIN number?  What about a wholesale number?  Can I deduct the expenses from setting up my studio?  It's a dedicated space in an apartment above my garage.  Also, much of my payments come through Venmo.  Should I set up a separate business account through Venmo?  So far I've made about $1200 total.

[shirleyh88]

Hello jkbentley,

Thank you for your question. I am happy to assist you.

As a sole proprietor who does not have any employees, you are not required to have an EIN. But you can apply for one if you would like to. Without an EIN, you would use your social security number (instead of EIN) as the taxpayer identification number.

A wholesale number is applicable when you do not pay taxes on products that you will not use directly in your business. You will retail these products to other individuals or companies. Hence, it depends on your line of work to determine if a wholesale number is required for your business.

Some of the expenses that you can deduct from the income of your business includes:

1. Advertising costs
2. Supplies
3. Repairs and maintenance
4. Office expenses

I have attached a link on “Reporting Self-Employment Business Income and Deductions for your reference below:

https://turbotax.intuit.com/tax-tips/self-employment-taxes/reporting-self-employment-business-income...

As for business accounts, yes, it is recommended that you set up a separate account for your business. It is not advisable to use your personal account for any of your business transactions.

Please let me know if this answers your questions, or if I can be of further assistance.

Thank you!

Shirleyh88

[jkbentley]

Thank you so much for your quick response.  I will mostly be providing a sewing service and not selling any products so doesn't sound like a wholesale number is helpful or applicable.  I was wondering if I could buy things like thread, sewing machines, etc. at a wholesale price.

Is there any benefit to an EIN?  Or is it just a preference?

[shirleyh88]

Hello jkbentley,

You can purchase your sewing materials at a wholesale price if you purchase them in bulk. This will help increase your profit margin since you are buying materials at a discounted price. However, you would want to make sure that you have potential buyers to purchase your end products. If you do not, then you may end up having materials that will not likely be utilized for your business.

I have attached an article that you can refer to regarding “A Small Business Guide to Buying Wholesale.”

https://www.fool.com/the-ascent/small-business/pos/articles/wholesale/

As for the EIN, the benefits of having one includes the following:

1. Easier tax filing.
2. Establishing a business credit.
3. Helps with hiring employees.

Please let me know if this answers your questions, or if I can be of further assistance.

Thank you!

Shirleyh88