As a personal entity, can I have business expenses deducted?
Hello Money community,
A quick tax question for NY/USA.
Say an online shop sends me a 5k check in my name and not under a corporation, to order 300 glass cups.
And I'm sort of the middle man and I will be using 4k that I got to order the 300 cups from the factory in China. That would leave me with 1k profit after all expenses are paid.
Since I'm receiving the money as a personal entity, will I be taxed on the 5k or 1k?
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You are in business for yourself. You file Schedule C with your income tax return, and can deduct the business expenses and the cost of goods sold from the gross receipts of your business. If you have inventory (things bought but not yet sold by the end of the year of purchase), then there are other calculations that need to be done. You will have to pay income tax as well as Social Security and Medicare taxes (both the employee's share and the employer's share) on the net profits from this business activity.
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