When I look at the IRS site for labor costs I interpret it as saying you can only track where you have paid for the labor (e.g. given yourself a salary). Am I misinterpreting that? Can I track my labor costs for making the jewelry and the time spent at shows selling it?
Sorry, as a self-employed person your labor is not an expense of the business.
The wages line (26) is only for other people you employ.
You are not permitted to give yourself a paycheck and do withholding as you would with employees.
You take money out of the business as "draws". These do not reduce the net profit of the business.
You are not allowed to deduct health insurance or retirement contributions as an expense of the business either.
You are taxed on the net profit of the business whether you take the money out or not.
Being "Self-employed" is the least fringe benefit favorable form of doing business.
Sorry, as a self-employed person your labor is not an expense of the business.
The wages line (26) is only for other people you employ.
You are not permitted to give yourself a paycheck and do withholding as you would with employees.
You take money out of the business as "draws". These do not reduce the net profit of the business.
You are not allowed to deduct health insurance or retirement contributions as an expense of the business either.
You are taxed on the net profit of the business whether you take the money out or not.
Being "Self-employed" is the least fringe benefit favorable form of doing business.
Thank you for the prompt reply. So does this mean the cost of the goods is only ever related to the raw materials and not the effort that goes into making it into a new good for sale?