Video:How to File Taxes for a Home Business
with Michael AnicetoFiling taxes for a home-based business might seem complicated, but it's easy to figure out. This About.com video will teach you the basics for filing taxes for a home business.See Transcript
Transcript:How to File Taxes for a Home Business
Hi, my name is Michael Aniceto from Heald Hoffmeister and Company in Needham, Massachusetts, and today for About.com I'm going to show you how to file taxes for a home business.
Keep Track of Finances for Home Business
Whether you're a soul proprietor or a single member LLC, you will file your business takes on a Schedule C on your personal tax return. Also, remember to keep track of your income and expense with either accounting software or a homemade spreadsheet. It is important that you keep a log of all business miles driven because you can expense these miles using the applicable standard milage rate.
Depreciation and Self-Employment Tax
Another aspect of business is depreciation. Major expenses such as property, equipment, furniture and vehicles should be depreciated for the asset's useful life. A sole proprietor or single member LLC must pay self-employment tax on the net income reported on the Schedule C. Self-employment tax is made up of the employee and employer's portion of Social Security and Medicare tax. Self-employment tax and self-employment health insurance are deductions against income tax on your 1040.
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