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156 - Determining Business Income
Manage episode 331974904 series 3363155
محتوای ارائه شده توسط Braden Drake. تمام محتوای پادکست شامل قسمت‌ها، گرافیک‌ها و توضیحات پادکست مستقیماً توسط Braden Drake یا شریک پلتفرم پادکست آن‌ها آپلود و ارائه می‌شوند. اگر فکر می‌کنید شخصی بدون اجازه شما از اثر دارای حق نسخه‌برداری شما استفاده می‌کند، می‌توانید روندی که در اینجا شرح داده شده است را دنبال کنید.https://fa.player.fm/legal
On this episode I dig into quarterly taxes and how to calculate them for your business.
If you haven't already, go back and listen to yesterday's episode before diving into today's episode.
The first step is to understand what business income is. According to the IRS, self-employment income is income earned from carrying on a trade or a business as a sole proprietor, contractor, or some form of partnership.
Keeping it simple, if you're doing something that's bringing in money and you're listening to this podcast, you probably have a business.
For tax purposes, freelance/1099 income is the same as business income. Only our self-employment income is subject to self-employment tax (our share of Medicare and social security). This is a 15.3% tax on our net self-employment income (business profit, calculated after business expense deductions).
To be a deduction, the IRS says it must be an ordinary and necessary expense. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful or appropriate in your trade or business.
Some deductions are fully deductible, example - your podcast microphone for recording your podcasts. Some deductions are only partially deducible, example - business lunches.
Grab a copy of the IRS form Schedule-C. You should track your business expenses in the same way the Schedule C does to make it easier to file. You want to avoid having too many expenses in your "Other" category.
You want to maximize your deductions without over-inflating your deductions. Don't buy shit you don't need for your business and claim it as a deduction.
Gross Business Income = all the money we're making in our business.
Gross business profit = Gross Business Income - Cost of goods sold (COGS)
Example: My book costs $15 to print, $7 to deliver (that's a business expense.) My profit is $9
Net income = Gross business income - Total Deductions
Homework:
Join the Braden's Bestie's Facebook group to have your questions answered on the podcast.
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