Business & farm

The way that you report your income and expenses generally looks like:

• Start with Gross Income (all income received before any inventory, expenses, or fees)
• Then subtract: Cost of Goods Sold (these are your expenses for purchasing or creating inventory to sell)

(This gives you an amount commonly called "Gross Profit".)

• Then subtract: Expenses (these are the remaining expenses: wages, business licenses, office supplies, accounting fees, etc.)

The result of these steps is your "Net Profit" (or "Net Loss") and is what will be included in your taxable income for the year.

That is very simplified, and I will include links to articles with more details below. For your question, you would report the full amount that you received on your 1099s as your Gross Income. From that, you will subtract the cost of purchasing your wholesale items (your Cost of Goods Sold). And then subtract your other business expenses that are not directly related to your inventory.

Reporting Self-Employment Business Income and Deductions  (See Part III about Costs of Goods Sold)

Do I Need to Report Inventory? 

Form 1099-K Decoded for the Self-Employed 

Please note that these links are mostly directed at people who report their business income on a Schedule C (sole proprietors or Single Member LLCs). But, the idea of separating gross profit, cost of goods sold, and ordinary expenses applies to all business types.

Thank you for participating in this event!

-- KimberW