Dulce Santander

Dulce Santander

Tuesday, February 4, 2014

Business income is income

Self-employed business owners can use the shorter Schedule C-EZ to report their business income and expenses. You qualify to use Schedule C-EZ if your total business expenses are $5,000 or less. If your expenses are more than $5,000 or if you are reporting a business loss (expenses are greater than your income),
then you must use the longer Schedule C.
Schedule C-EZ (PDF, 2 pages, includes instructions)
Should I File Schedule C or Schedule C-EZ? (IRS.gov)
Tips for Schedule C-EZ (About.com)
What Counts as Business Income?

Business income is income you earned because you owned and operated a business. The IRS explains business income this way: "If there is a connection between any income you receive and your business, the income is business income. A connection exists if it is clear that the payment of income would not have been made if you did not have the business." (Publication 334)
Business income includes:
Income received for services rendered as an independent contractor, freelancer, or other non-employee position;
Income received for manufacturing or selling merchandise;
Income received from government contracts;
Fair market value of property or services received through bartering.
For more information about reporting business income, see chapter five of IRS Publication 334.
Reporting Business Expenses

Report your business expenses separately from your gross business income. Business expenses are defined as expenses that are ordinary and necessary for conducting your business.
Business expenses are reported on Schedule C or C-EZ. Schedule C has categories for all sorts of expenses such as supplies, rent, insurance, and so forth. You should take some time to familiarize yourself with the basic categories found on Schedule C, and set up your accounting software to use the categories that are relevant to your business. This will make it easier for you to keep track of expenses and save time when filling out your tax return. For more information about business expenses, see:
Last updated March 9, 2013.

0 comments :