Do you file tax by profit made or total sales?

[ben805]

Say I just sold $1000 worth of prints, the prints cost me $150 so I make a profit of $750. So when I file my tax, do i report the amount of profit $750, or the total sale price of $1000? Now, let's say the school i sold the prints at is charging me a 30% kickback fees, so they get $300 off of the $1000 prints I sold, now after minus the $150 print cost it brought down my profit to only $500, then what should I report the tax at?

[Karl C]

Consult a attorney and accountant for the best information.

[highbarger]

Consult a attorney and accountant for the best information.

And around here, you have to consider SALES tax and INCOME tax.

[GPR1]

It depends on your country, state and city. In the U.S. for federal you'll complete the correct form, showing your gross income, the expenses you had to make it, and the profit or loss. State and city vary completely. My state (Washington) has a revenue office that will answer your questions). Check the internet or your phone book.

Greg

[estisdal]

The long (probably incorrect answer) is that you'll show $1000 in revenue as a business. You'll have to pay out any local sales taxes off the top, then income taxes (state/federal). The upside is that any business related expenses will be deductible from the income taxes.

Short answer: get an accountant! :D

[amfoto1]

The probably incorrect, long answer: You write the $1000 into the "income" column of your accounts receivables, and the $150 into the "expenses" column of your accounts payable. Deposit the funds in your company bank account. Then, at the end of they year you subtract one from the other, ending up with $750 profit, on which taxes are due if there are no other factors effecting that profit (such as equipment depreciation, travel expenses, insurance premiums, etc., etc., etc.). Next, you calculate your taxes, and exactly how you do that will differ a lot depending upon how your business is structured (sole proprietorship, LLC, S corporation, partnership, etc.), and upon how you have elected to do your accounting, and with some business structures the method of income reporting you have chose, as well as how you and/or your employees are paid by said business. Now, you will probably actually have to calculate these things and make estimated tax payments on a quarterly basis, still filing a return annually and either paying additional or getting a refund depending upon how accurate your quarterly estimates were throughout the year.

Simple and far more correct answer: Hire that local accountant now!

[tracknut]

Simple and far more correct answer: Hire that local accountant now!

...especially if every time you subtract $150 from $1000 you get $750 :)

Dave

[amfoto1]

...especially if every time you subtract $150 from $1000 you get $750 :)

Dave

Tax return math. It's the new, new math. :cool:

[sfaust]

Don't forget filing estimated taxes, etc.

The very best advice you can get for free....

Take $250 of the profit now and give it to an accountant. Tell them what you are doing and the questions you have. You'll walk out with the 'correct' answers to those questions, answers to questions you haven't even thought about yet, and it will most likely save you $250 over the year thereby covering their fee completely.