Share This Page

Tweet

Note: This article was first published in the Jan/Feb 2018 issue of PSI’s member magazine, Pet Sitter’s World.

As tax season gets underway, you may have a myriad of questions related to taxes and your pet-sitting business. We reached out to Bonnie Lee, E.A., owner of Taxpertise, to share some tax tips for pet sitters.

PSI: As small business owners, what types of deductions can professional pet sitters and dog walkers claim that they may not think of?

Bonnie: They may be entitled to a home office deduction. If you are taking a home office deduction, remember to list out the contents of the office so that you can take depreciation for those items: desk, file cabinet, rugs, etc. [Other deductions to consider are] automobile mileage expense for miles driven to and from clients’ homes and other business destinations, the cost of toys and supplies purchased to amuse their clients’ pets.

PSI: Since most pet sitters work from home, can home expenses such as mortgage interest, home insurance, etc. be deducted?

Bonnie: Yes. You must calculate the total square footage of the home versus the total square footage used for office space and storage of pet supplies. The office must be used exclusively and on a regular basis for pet sitting activities. If pet sitting is offered in their own home, you would deduct home office expenses as though it were a child care facility. Check with a tax professional for more information.

PSI: What records should pet sitters and dog walkers keep throughout the year to be prepared for tax time?

Bonnie: It’s best to have a separate bank account for pet sitting activities. You should track income and expenses and mileage.

PSI: Do pet-sitting and dog-walking business owners need to pay estimated taxes quarterly, or only file their taxes annually?

Bonnie: If your tax liability from all sources totals $1,000 or more (after withholding from other sources), you are required to make estimated tax payments, or if you paid at least 90 percent of the tax for the current year or 100 percent of the tax shown on the return for the prior year, whichever is smaller. Each case is individual so it’s best to check with your tax pro to determine if you are required to pay estimates.

PSI: In regards to the various business structures (sole proprietor, LLC or S Corp/Corporation), are there tax advantages of the different options that pet sitters should consider?

Bonnie: Usually, for tax purposes, sole proprietorship is the way to go unless you are making in excess of $100,000 net profit per year. Then it’s advisable to discuss your options with your tax pro and your attorney to determine if you should change your entity type. LLC and S Corp or C Corp generally are subject to a minimum state franchise tax even if the business suffers a loss for the year. In CA, the minimum tax is $800 per year. Then there’s the additional expense of tax preparation, payroll preparation (if S or C Corp, you are required to go on payroll) so it can be overly expensive and paperwork intensive when it could be cheaper and less headache to continue as a sole proprietorship. This must be weighed along with the advice of an attorney who can fill you in on legal aspects of each entity.

To learn more about Bonnie Lee, visit www.taxpertise.com.