I have a sole proprietor business and put my own capital into the business. where do i show that capital investment on my schedule c?

Forum|Forum|7 years ago
June 4, 2019
9 replies
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i started a sole proprietor business in 2014 and put my own capital into the business. where do i show that capital on my schedule c?

TurboTax Home & Biz Windows

Best answer by PatriciaV

Your capital investment is your equity in the business. Equity is not reported on Schedule C, only income and expenses. If you funded your business out of your "capital", then your contributions are reflected in the expenses and assets in the business (money spent on your business).

PatriciaVAnswer

Level 15

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candy_conley6

Level 2

Is my contributed capital considered income to my sole proprietor business?

Critter

Level 15

@candy_conley6 wrote:
Is my contributed capital considered income to my sole proprietor business?

NO ... it is NOT income. Seed money from the business owner is NEVER considered taxable income ... why would you even want to pay income taxes on money you simply moved from your right pocket to the left pocket of your pants ?

fanfare

Level 15

If you invested assets (computers, furniture , machinery) you have to depreciate it. Each category has its own depreciation schedule.

Carl

Level 11

The IRS considers a sole proprietorship or single member LLC to be a disregarded entity. In other words, the IRS does not recognize your business as a separately taxable entity. Income earned by the business is "exactly" the same as income earned by you. Therefore, you can't have a "capital investment" in yourself.

You may have what is referred to as "startup costs". Startup costs are claimed in the first year you are "Open for business" and it flat out does not matter in what year those startup costs were incurred either. Basically, startup costs are the money you have to spend before you can open for business. For example, you may need to purchase tools and equipment for your business, pay all sorts of business registration fees to your town, city, county, parish and state, or purchase some type of liability insurance. All of these expenses are things you *HAVE* to pay for before you can put that "open for business" sign up.

So startup costs are claimed in the first year the business is open. For that first year you can only claim a maximum of $5000 of startup costs, or your first year's taxable business income earnings; whichever is *LOWER*. Anything over that gets amortized and deducted over the next 15 years.

carlawestbrook

Level 2

I am in the process of doing my taxes and needed to know how I record a $79,000 equity contribution to my S corporation tax return. do I add it as income?

also, do i enter loan fees to my returns as an expense?