Small Business Tax

What are the types of payments that are taxable income for a business?

Any payment you receive connected to your business is considered taxable business income?

There are traditional forms such as cash, checks, and credit cards for products sold or services rendered.

In addition, if you receive a payment that would not have been made if you didn't have the business, that payment is business income.

Business income can include bartering, real-estate rents, interest and dividends, cancelled debt, damages, or even kickbacks.

Also, if you direct payment through a third party, it is still your income and must be reported on your return. But there are business deductions, too.

You can deduct business expenses -- the cost of carrying on a trade or business.

There are several types of deductible business expenses.

To be deductible, a business expense must be both ordinary, which is common and accepted in the line of work, and necessary, that is, helpful and appropriate.

It's important to separate business expenses from other expenses, such as cost of goods sold if your business makes or resells products, the purchase of assets, or personal expenses. It's very important to keep good records about your business income and expenses.

You don't want to overreport your income and pay too much tax, and you don't want to underreport and pay too little.

There are benefits to having a formal set of books and records, accounting or financial software, and separate bank accounts for business and personal income and expenses.

Small Business Tax Responsibilities Publication 4591 IRS Publications

Pub 15 (Circular E), Employer’s Tax Guide

Pub 334 Tax Guide for Small Business

Pub 463 Travel, Entertainment, Gift, and Car Expenses

Pub 505 Tax Withholding and Estimated Tax

Pub 535 Business Expenses

Pub 583 Starting a Business and Keeping Records

Pub 587 Business Use of Your Home

Pub 946 How to Depreciate Property

Pub 966 Electronic Choices to Pay all your Federal Taxes

Pub 1779 Independent Contractor or Employee

Pub 3148 Tips on Tips: A Guide to Tip Income Reporting

Pub 3402 Taxation of Limited Liability Companies

Pub 3995 Recognizing Illegal Tax Avoidance Schemes


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