<prompt> Human: Hello,Complete noob when it comes to finances here... And im getting kind of worried because I believe Ive really screwed myself due to poor planning and procrastination..So heres my story:I make around 35k a year working full time for a print shop. I also do graphic design and printing on the side. My side business has never been a whole lot of income for me so being a 22 year old i just pocketed the extra money as a freelancer.. Fast forward to 2016, I ended up making 15,000 from one client, and will probably make close to that again or more this year 2017.Any of the work I do on the side goes through my paypal and is totally documented as far as how much i received and from who. Whenever I get print work on the side, I print it through my full time jobs shop, and then resell it at an increased amount. I pay sales tax on the shops invoices, and charge my client that sales tax. I also heard from my graphics teacher that if youre a graphic designer in CA, and only creating graphics that will be used on web and will never manifest physically, you dont have to charge sales tax on that... So for about half the year i havent been... that is up until about 3 months ago, because ive gotten scared about my situation and thinking that I should be charging tax if the government is going to collect this stuff... So heres the kicker... I made around 15,000 last year, and didnt report it... both my client and I agreed to brush it under the rug, she wrote it off as Advertisement or something, but assured me that it shouldnt be a red flag if the IRS questions it... Ill probably make the same amount this year however Id like to report it, and completely legalize everything because I want to do everything right and by the books as I am rebranding and creating a new legal company keep in mind I do not have a legal registered business ATM or have had one for the past two years...During the course of the last two years, ive saved almost nothing. My rent each month takes the entirety of my full-time paycheck, and anything ive earned on the side has gone to groceries, events, and general living stuff.This year, Ive spent close to 8k on new equipment for my photography and graphic design business... can this be written off?Im probably going to file my new company as a Sole Proprietor Ship for the first year, and then transition to an LLC. My new legal business will do all of the following Photography, Printing, Graphic Design, and Marketing.SOOO, heres the question.. How screwed am I? What do I do? Can I get away with out paying for last years screw up, and just legalize a new business and pay for this years? AND will i be able to total up all of the business expenses ive poured into this year, including gas, photography equipment, computers, etc.  <response>: You dont need to have a business to do freelance work. Its like being an independent contractor. I did this for years without having an official business.The company or companies you did work for, legally should report that they paid you x amount of dollars. You should then receive a 1099 in the mail at the beginning of the year just like your W2 from each employer that states what they paid you. If they dont report that they paid you and you dont receive a 1099, its ok. You can just report the income yourself.Because you already have a full time job, you are already paying taxes on every paycheck so I dont think youll be penalized for not paying taxes on that 15,000 throughout the year, however you will likely owe something in April. On the bright side I dont think it will be that bad. You can definitely write off your new equipment. Save any receipts that could be related to the freelance work you did. Its highly possible what you will owe wont be too bad. Its even possible you may not owe anything. Its all about those receipts.As for the previous years 15k, I agree with the other comments. Talk to a tax professional. 