I'm about to start up an etsy shop but I am not sure how the income tax works.
I live in California if that matters
You will report your business income and expenses on a Schedule C as part of your regular Form 1040 tax return (unless you become a partnership or corporation). Your profit from the business will be subject to self employment tax as well as regular income tax. Sales tax is another matter and varies from state to state. Contact your local small business development center or SCORE chapter for free assistance in setting up your business.
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