BusinessHABBusiness income schedule c: According to the IRS, the road to profitability begins with reporting your business expenses and profits accurately.
Tip 20 of our 50 Tips for Small Business Tax Preparation addresses reporting your profit as a sole proprietor or independent contractor.
The Schedule C is made for sole proprietors and independent contractors with up to $315,000 in business income (excluding capital gains).
To file as an independent contractor, you must have no employees.
If you have any hired help, they must be subcontractors rather than company employees.
You report your profits on Schedule C and use it to calculate self-employment tax if necessary.
File a separate Schedule C for each business you operate, even if they are related – such as a restaurant and catering service that operate under different business names.
Here are 20 tips to keep in mind when completing Schedule C:
50 Business Income Schedule C – 20 Tips for Reporting Your Profits
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When you own a business, reporting your income is one of the primary tasks.
After all, business owners must pay taxes on their profits at both the corporate and personal level.
And while some accounting software packages make this process easier by generating a variety of useful reports with just the click of a button.
There’s no getting around spending time understanding tax laws and preparing documents.
Fortunately, most IRS forms are fairly straightforward, especially if you’re new to bookkeeping.
The following tips can help you understand how to report business profits on your Schedule C so that you won’t get audited or receive an unexpected tax bill come Tax Day.
Summing up: 20 Tips for Reporting Business Profits on Schedule C
If you want to report accurate business income on your Schedule C, you’ll need to track all your income, pay attention to the difference between gross and net income, be accurate with your reporting, pay attention to the difference between fixed and variable expenses, track your advertising costs, track your employees’ time, determine which expenses are deductible, and don’t forget about big-ticket deductions. Beyond that, you’ll also want to keep your receipts organized, track your mileage, and don’t forget to file Schedule SE if you’re self-employed. And remember, you can always ask the IRS for a free extension if you’re running behind on your taxes. There’s no shame in seeking extra time to get your paperwork together.
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