Question by JON Z: I need some advice on filing taxes for a small business.?
My new son-in-law has a small one truck carpet cleaning business, and has asked me to figure out his taxes this year. His business has been lousy and I’m sure that he will end up at a loss after all is said and done. Obviously he cannot afford an accountant.
I have been doing my own and family member taxes for many years, but have never done any business taxes before.
What forms will I need?
Any special instructions?
ALL help will be greatly appreciated.
Answer by Bobbie
Key words are good detailed records of all ordinary and necessary expenses of the business operation and a daily detailed mileage record or log of all business miles and all personal mileage that the vehicle is actually used for each purpose to help you determine your actual percentage of business use and in the event that you need the written records at some future time you would have them available to you.
All of your gross income from all sources of worldwide income will be reported on your correctly completed 1040 federal income tax return.
Using a receipt book to make a receipt for each time that any one pays you in any way or item or trade for the amount of $ $ value that is received at that time and totaling the gross self employed income for the tax year with any other 1099-MISC income that is received after the end of the tax year and entering the total gross $ $ $ value amount on the schedule C line 1 GROSS receipts from your trade or business
In general, taxpayers may deduct the ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.
You would have to be sure that you handle your business deductions correctly for your business operation.
For instructions and forms go to the IRS.gov website and use the search box for publication 334 a very good place to start with examples.
Publication 463 Travel, Entertainment, Gift, and Car Expenses
Use the search box at the www.irs.gov website for Small Business and Self-Employed Tax Center
Filing Season Central is your one stop assistance center for filing your business returns. This includes Highlights of Tax Law Changes, Tax Tips, and more.
2 of the seven tax tips for starting a business enclosed below.
#4 Good records will help you ensure successful operation of your new business. You may choose any record keeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
#7 Visit the Business section of the IRS gov website for resources to assist entrepreneurs with starting and operating a new business. Go to the IRS gov website and use the search box for the below referenced material
*Starting A Business
*Operating A Business
*Closing A Business
*Publication 4591, Small Business Federal Tax Responsibilities (PDF 470.1K)
Hope that you find the above enclosed information useful for your situation and good luck to you.
What do you think? Answer below!