Can I separate home business taxes from my regualar job taxes?
Wednesday, October 15th, 2008 at
10:53 pm
andietom asked:
I have started a party type home business. I also have a regular job w/taxes being held out. Can I file my income taxes on my regular job and then file separate taxes for my business? If so, do I need a business tax id #?
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Assuming you are operating as a sole proprietorship, you should file both incomes together. However, if you are a sole proprietorship, the income flows through to you as regular income and you will need to pay Social Security taxes on the income, unless you are over the income limit on your day job. Don’t forget you may be able to take deductions for office space used in your home for the business as well as deduct certain expenses (travel, supplies, etc.). If the business is successful, you probably need to hire an accountant.
I work and have a home based type business (party plan) and do pretty well with it, as well as my regular “day job” which I have had to cut back on hours because the home business is doing so well.
I file together, using a schedule SE for my home business to take the deductions out such as mileage (a HUGE deductions) airfare and hotel for training events, and usually after the mileage is calculated I wind up owing nothing on my home based business. I also deduct postage and advertising expenses, and office supplies, demo products, and any losses such as damaged or broken items–I write them off.
I do travel quite a distance to do my parties, several times a week.
You cannot deduct clothing or dining expenses, or “fluff” your deductions, it will set off a big red flag, so be very careful that you only deduct what you actually can legally.
Unless you are a C corporation, all of the income eventually gets to your 1040, so the tax bill will be based on your combine income from both W-2 job and the business income.
If you are a “sole proprietor” and do not have employees, you do NOT need an EIN.
Assuming that your home business is not incorporated, you must file one return showing your income from your job and also your income from your home business.