To make sure I understand correctly...I enter my gross sales receipts as I've always done on line 1 Sch C. I'd go ahead & enter the 1099-K amount, as well. Would I enter the 1099-K duplicate reporting entry on Sch C Other Expenses or is there a better place to put the entire 1099-K total? That total is a pretty large number since it represents 9 months of credit card sales for the shop.
That brings me to one more potential problem that just came to mind. In our shop, my business partner owns her own business. Her part of our inventory was the gift items. My part was the apparel & accessories. We were partners in spirit but not financial partners. We ran all of the sales for the shop thru the POS & all credit card sales were processed on the same terminal. At the end of each month, I'd run a report that gave us all of her sales and I'd pay her, minus her portion of the CC processing fees. Sales taxes were paid for all of the sales thru the shop - she sent in a quarterly report detailing that her sales were included in reports for the shop. This was approved by the State Comptroller's office. So, her sales won't be included in my Sch C gross sales receipts. I've never had any problems in the past 12 years & I'm just trying to ensure that I don't have any this year, especially since we closed the business at the end of August.
Also, I assume that the sales taxes and the processing company's fees will be taken out of this equation because they're entered as expenses. Is that correct, because I sure can't afford to pay income tax on sales tax? I'm not that good at understanding accounting procedures so I apologize for how limited my knowledge is. My concern is this: once you compare the total amount submitted on the 1099-K to my total gross sales receipts (Line 1, Sch C) these two numbers will not be the same. My total also includes all of the cash & check sales. I just want to make sure that I'm not doing anything to cause Red Flags.
Thank you so much for your help and for getting back to me at your earliest convenience to clarify.
Paula
