How to Reduce the Taxes on Your Venmo 1099-k Business Owners

Published on: December 6 2022 by FeedbackWrench

How to Reduce the Taxes on Your Venmo 1099-k Business Owners

How to Reduce the Taxes on Your Venmo 1099-k Business Owners

How to Reduce the Taxes on Your Venmo 1099-k Business Owners

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00:00:00	00:00:04	hey what's going on um 2022 is here and
00:00:03	00:00:06	there's going to be some new rules with
00:00:04	00:00:08	venmo so whether you've been uh running
00:00:06	00:00:09	a side business or whether you've been
00:00:08	00:00:11	just sending a ton of money back and
00:00:09	00:00:12	forth between you and your friends or if
00:00:11	00:00:14	you've been buying stuff and selling it
00:00:12	00:00:16	you're going to want to know about this
00:00:14	00:00:18	my name is rob and i own feedback wrench
00:00:16	00:00:20	we help uh small businesses with their
00:00:18	00:00:21	their marketing their digital marketing
00:00:20	00:00:23	we create content about entrepreneurship
00:00:21	00:00:24	and whatnot here what i want to tok
00:00:23	00:00:26	about is why is this going to be really
00:00:24	00:00:27	important for you because i want to
00:00:26	00:00:29	teach you how to make sure you mitigate
00:00:27	00:00:32	your taxes because because you're going
00:00:29	00:00:33	to get this 1099 from venmo
00:00:32	00:00:36	you're going to want to know how do you
00:00:33	00:00:38	reduce your taxes right now reach out to
00:00:36	00:00:40	a bookkeeper a tax accountant i
00:00:38	00:00:42	recommend that you look for an
00:00:40	00:00:44	outsourced accountant
00:00:42	00:00:45	and i got all sorts of those we help
00:00:44	00:00:46	them with their websites and stuff but
00:00:45	00:00:48	anyways like and subscribe if this is
00:00:46	00:00:51	helpful let's dive right into it so for
00:00:48	00:00:54	the 2021 tax year venmore will issue a
00:00:51	00:00:57	form 1099k to business owners who have
00:00:54	00:00:59	passed the irs reporting threshold for
00:00:57	00:01:00	their state of residence so for most of
00:00:59	00:01:04	these states it's basically if you've
00:01:00	00:01:07	gone over 20 000 us dollars in gross
00:01:04	00:01:09	payment volume for sales of goods or
00:01:07	00:01:10	services in a single year so a couple of
00:01:09	00:01:11	things that's for
00:01:10	00:01:14	twenty thousand 000
00:01:11	00:01:16	of gross that's just total and that has
00:01:14	00:01:18	to do with sales of goods or services so
00:01:16	00:01:20	how you actually label them in venmo
00:01:18	00:01:23	will have a little bit to do with it and
00:01:20	00:01:25	then you have 200 payments for goods and
00:01:23	00:01:26	services so if you hit 20k or 200
00:01:25	00:01:29	payments uh you're going to be issued a
00:01:26	00:01:30	10.99 and what a 1099 is is basically
00:01:29	00:01:32	income that's come to you and it's
00:01:30	00:01:35	completely untaxed it's almost like you
00:01:32	00:01:36	own your own business so the first thing
00:01:35	00:01:37	that's going to happen is you're going
00:01:36	00:01:39	to have to run
00:01:37	00:01:41	like a schedule c you're going to be a
00:01:39	00:01:43	self-employed sole proprietorship that's
00:01:41	00:01:44	going to owe some taxes right and we'll
00:01:43	00:01:46	dive into that real quick but basically
00:01:44	00:01:50	let's just say it shows that you earned
00:01:46	00:01:52	a net 10 or a net 20 000
00:01:50	00:01:54	on venmo right now they issue this it
00:01:52	00:01:56	says hey we said 20 000
00:01:54	00:01:58	worth of transactions come here what the
00:01:56	00:01:59	heck is going on well here's the safety
00:01:58	00:02:01	okay number one thing i want you to do
00:01:59	00:02:02	is i want you to open a separate bank
00:02:01	00:02:05	account it's going to be your business
00:02:02	00:02:06	bank account right so if you are
00:02:05	00:02:08	approaching this 200 transactions on
00:02:06	00:02:11	venomo or twenty thousand dollars on
00:02:08	00:02:13	vanbo and you wanna be careful open up a
00:02:11	00:02:14	separate business bank account um you
00:02:13	00:02:16	should also probably become a sole
00:02:14	00:02:18	proprietorship and register with your
00:02:16	00:02:19	state go to your secretary of state
00:02:18	00:02:21	website you wanna actually register a
00:02:19	00:02:23	little business name this is just good
00:02:21	00:02:24	if you get side hustle income going i
00:02:23	00:02:26	would just let you know that the
00:02:24	00:02:27	government is coming for you first of
00:02:26	00:02:28	all there's this new announcement where
00:02:27	00:02:30	they're going to be monitoring
00:02:28	00:02:32	transactions under 200 they're going to
00:02:30	00:02:34	be looking for this number two there was
00:02:32	00:02:36	that update about how the irs wants you
00:02:34	00:02:38	to report even stolen property well
00:02:36	00:02:39	that's because the irs is spending all
00:02:38	00:02:41	the money or the government is spending
00:02:39	00:02:43	all the money and the irs is gearing up
00:02:41	00:02:44	with a ton more agents and everything
00:02:43	00:02:45	they're
00:02:44	00:02:47	they are
00:02:45	00:02:50	joe biden is in power and joe biden
00:02:47	00:02:51	wants to spend money and he wants to tax
00:02:50	00:02:53	however you feel about that that's
00:02:51	00:02:56	what's about to occur here so they're
00:02:53	00:02:57	gearing up to tax more and what venmo is
00:02:56	00:02:59	doing they know how we're getting around
00:02:57	00:03:01	this or not me but how people are
00:02:59	00:03:02	getting around this so bottom line is
00:03:01	00:03:04	you should just embrace the fact that
00:03:02	00:03:05	your side hustle is now an official sole
00:03:04	00:03:06	proprietorship
00:03:05	00:03:08	and the way that's going to work is
00:03:06	00:03:10	you're going to have your your income
00:03:08	00:03:13	that comes in that's your gross so maybe
00:03:10	00:03:15	it shows 20 24 000
00:03:13	00:03:18	but then you're like i didn't make that
00:03:15	00:03:19	much well you're going to want to make
00:03:18	00:03:21	sure that all your revenue
00:03:19	00:03:24	goes into this business bank account all
00:03:21	00:03:26	that venmo goes into that and then all
00:03:24	00:03:27	of the things that you pay for in that
00:03:26	00:03:29	business should be used in that business
00:03:27	00:03:31	bank account whenever you want money out
00:03:29	00:03:32	of that bank account transfer it over
00:03:31	00:03:34	but the whole idea is if you just stik
00:03:32	00:03:36	to really simple bookkeeping have a
00:03:34	00:03:38	business bank account maybe register and
00:03:36	00:03:40	actually create a you you can't create a
00:03:38	00:03:41	business bank account until you register
00:03:40	00:03:42	with your secretary of state with a
00:03:41	00:03:45	business name so you should probably do
00:03:42	00:03:47	that right it takes it's not very hard
00:03:45	00:03:48	the the more democrat your state is the
00:03:47	00:03:50	word the harder it is to start a
00:03:48	00:03:52	business but once you've got that that's
00:03:50	00:03:53	just going to help you and what you want
00:03:52	00:03:55	to do is you want to show your gross and
00:03:53	00:03:56	then your net right you want to show all
00:03:55	00:03:58	the little expenses so that you're not
00:03:56	00:04:00	on the hook for this 20 000
00:03:58	00:04:02	that's the biggest thing is you have to
00:04:00	00:04:05	show where did that money go so if you
00:04:02	00:04:08	get issued a 1099k you have got to show
00:04:05	00:04:10	the net right so maybe you brought in um
00:04:08	00:04:13	all that money but you also have to show
00:04:10	00:04:15	well maybe i was buying furniture
00:04:13	00:04:15	and then i was fixing it up and selling
00:04:15	00:04:18	it
00:04:15	00:04:20	but i was using my personal bank account
00:04:18	00:04:23	when i bought the stuff well you have to
00:04:20	00:04:25	put those as inventory you've purchased
00:04:23	00:04:27	and now you just you're going to want a
00:04:25	00:04:28	bookkeeper eventually if you get really
00:04:27	00:04:30	big but you just need to know you're
00:04:28	00:04:31	going to want to start tracking this in
00:04:30	00:04:34	a business bank account you probably
00:04:31	00:04:37	want to set up quickbooks online um
00:04:34	00:04:39	or xero something like that i recommend
00:04:37	00:04:40	reaching out to if you just search tax
00:04:39	00:04:42	accountants near me outsourced
00:04:40	00:04:44	accountant near me folks will be able to
00:04:42	00:04:45	help you with this but um you want to be
00:04:44	00:04:47	on the lookout for that that's a big
00:04:45	00:04:48	deal they're going to be issuing this
00:04:47	00:04:50	the other thing that you're going to see
00:04:48	00:04:52	is in massachusetts maryland vermont and
00:04:50	00:04:53	virginia the threshold 600 bucks
00:04:52	00:04:56	so a handful or you're going to get
00:04:53	00:04:59	1099s and you just need to know that you
00:04:56	00:05:01	want to keep that bookkeeping set up if
00:04:59	00:05:02	it shows you brought in 22 thousand
00:05:01	00:05:04	dollars and that's because you were
00:05:02	00:05:06	buying furniture fixing it up and
00:05:04	00:05:08	selling it but it shows 22 thousand
00:05:06	00:05:09	dollars and gross dog on it you got to
00:05:08	00:05:11	get the net in there so start thinking
00:05:09	00:05:12	about that right maybe keep a
00:05:11	00:05:13	spreadsheet of all the things that you
00:05:12	00:05:15	bought
00:05:13	00:05:16	and eventually get your bookkeeping
00:05:15	00:05:18	going the
00:05:16	00:05:22	oh excuse me the other thing you want to
00:05:18	00:05:24	know is that you are going to be taxed
00:05:22	00:05:26	a couple times here okay so right off
00:05:24	00:05:27	the bat welcome to sole proprietorship
00:05:26	00:05:30	taxing you're a small business owner
00:05:27	00:05:33	like me now and you get to see the gross
00:05:30	00:05:34	and write a check and there's nothing
00:05:33	00:05:37	worse than that okay so
00:05:34	00:05:39	the first thing that you're gonna owe
00:05:37	00:05:41	unless you're unless you have w2 income
00:05:39	00:05:43	that goes up to the social security
00:05:41	00:05:45	limit which is like 150 000
00:05:43	00:05:47	um what you're going to pay right off
00:05:45	00:05:50	the bat is you're going to pay 12.4 in
00:05:47	00:05:51	social security taxes and 2.8 percent in
00:05:50	00:05:53	medicare taxes those two things are
00:05:51	00:05:55	considered your self-employment taxes
00:05:53	00:05:56	now if you've got w-2 income from a
00:05:55	00:05:58	normal job coming in there's kind of
00:05:56	00:06:00	some games that get played there because
00:05:58	00:06:02	you only pay social security up to that
00:06:00	00:06:04	limit okay now you only owe that tax on
00:06:02	00:06:07	the net again if you showed 22 000 in
00:06:04	00:06:09	gross but you bought twenty thousand
00:06:07	00:06:11	dollars with the furniture and you only
00:06:09	00:06:13	had two thousand dollars net you'd only
00:06:11	00:06:15	owe that self-employment taxes on the
00:06:13	00:06:16	two thousand dollars and then it's going
00:06:15	00:06:18	to flow through to your 1040 you're
00:06:16	00:06:20	gonna pay um
00:06:18	00:06:22	income tax and you're going to pay
00:06:20	00:06:24	state income tax and federal income tax
00:06:22	00:06:25	so just prepare for that now here's a
00:06:24	00:06:27	little secret if you don't have any
00:06:25	00:06:29	employees and you're going to start
00:06:27	00:06:33	having to keep track of this one of the
00:06:29	00:06:34	best things you can do is open a sep ira
00:06:33	00:06:37	a
00:06:34	00:06:39	sep ira or a solo 401k and now if you
00:06:37	00:06:40	got another job you got to be careful
00:06:39	00:06:42	here because there's some rules if you
00:06:40	00:06:44	got a 401k going on this business and
00:06:42	00:06:47	not on this one but long story short you
00:06:44	00:06:49	could take up to 25
00:06:47	00:06:51	of the net of that
00:06:49	00:06:53	business net right so if you if you
00:06:51	00:06:56	netted five thousand dollars you'd be
00:06:53	00:06:57	able to take 25 of that and put it into
00:06:56	00:06:59	an investment account and then you can
00:06:57	00:07:01	actually invest it you know how you know
00:06:59	00:07:04	how a roth ira or traditional ira you
00:07:01	00:07:04	can kind of