Home Business
Tax
Post By : Mutiara - Business Idea
Some
people believe that it is better to make money as an entrepreneur than working
for someone else. Though this is hard, the rewards are many since the
individual doesn't answer to anyone and all the profits goes to the person.
Entrepreneurs
also have to do something that normal employed people do. Though the forms are
different, these individuals also have to pay taxes which is mandatory by the
government.
The
form that the entrepreneur fills up is called a Schedule C form. This should be
filed with the tax return so the income and expenses incurred can be reported
to the IRS. Those who don't know how to do this should follow these steps to
avoid making mistakes.
1. The
person should determine the kind of business that exists. Is this a sole
proprietorship or are there partners involved? If the individual lets people
sell the goods, then it is considered to be a single ownership.
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| Home Business Tax |
2. As
mentioned before,
there are many forms used in paying home business tax. If this
is not related to fishing or farming, then the schedule C is used.
3. The
person should get the schedule C form from the nearest Internal Revenue Service
Office. People who only spend less than $2,500 that have no inventory, uses
cash accounting, did not incur any losses, have no employees and are not
deducting depreciation can use the C-EZ form.
4. The
person should fill in pertinent details such as the name, social security
number and address on the form. Should the individual act as a distributor of
certain goods, the employer identification number must be mentioned.
5. The
person should also write down the business name. A brief description must also
be mentioned aside from the six digit code that is one of the things that also
have to be filled up in the form.
6.
There is a portion in the form that will ask about the accounting methods used.
If the person uses a simple cash method, that will not be a problem using the
schedule C form.
7. The
person should also answer yes or no if one had an active role in the business.
There are also other questions there which will have to be answered if this was
started up or purchased from a former owner.
Using
the home to transact business is considered tax deductible. All the person
needs to do to take advantage of these measures is reporting this to the IRS
using the proper forms.
Check
out my other guide on Home Business Scams and How to Avoid Them
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