topic Hairstylist here, and own a salon suite. I sell retail products. When it comes to claiming income, do I claim my full retail sales or what I made less the 50% mark-up? in Business & farm

Hairstylist here, and own a salon suite. I sell retail products. When it comes to claiming income, do I claim my full retail sales or what I made less the 50% mark-up?

hdesignert — Mon, 08 Jul 2019 14:58:38 GMT

so for instance if my bottle of shampoo is sold for $16 and I paid $8, (50% mark-up) do I claim the full $16 in the income section of do I claim the $8 which is my profit on the sale?

Re: Hairstylist here, and own a salon suite. I sell retail products. When it comes to claiming income, do I claim my full retail sales or what I made less the 50% mark-up?

Critter — Mon, 08 Jul 2019 15:05:21 GMT

You will report the total income received $16 and then the $8 cost of the product will be reported in the inventory section and it will net out on the Sch C ... you really need to get some local professional help to set up your bookkeeping correctly if you do not understand this basic accounting 101 procedure.

Here is some basic info to get you on the right track ...

If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-Misc for some of your income but you need to report all your income. So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Publication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf

https://turbotax.intuit.com/tax-tools/tax-tips/Self-Employment-Taxes/Beginner-s-Tax-Guide-for-the-Se...

https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-an...

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Home & Business return....
http://quickbooks.intuit.com/self-employed

Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for 2014 SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.

PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2015  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:
    90% of the tax to be shown on your current year’s tax return, or
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year, You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

OR Go to….
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

You can prepare the estimated payments in the program but you cannot pay them thru the program ... you will either mail them in OR pay directly online at the federal & state web sites.

Re: Hairstylist here, and own a salon suite. I sell retail products. When it comes to claiming income, do I claim my full retail sales or what I made less the 50% mark-up?

VolvoGirl — Mon, 08 Jul 2019 15:25:41 GMT

You enter the full gross total income you receive. Then you enter your expenses. If you don't track the items as inventory you can just enter them as Supplies. Turbo Tax will calculate your net profit or loss.

Re: Hairstylist here, and own a salon suite. I sell retail products. When it comes to claiming income, do I claim my full retail sales or what I made less the 50% mark-up?

pk — Tue, 09 Jul 2019 03:52:15 GMT

Agreeing with @Critter excellent reply, just wanted to point out that you really have two types of income to consider (a) the service portion -- hair styling etc. and (b) retail sale ( of beauty products ). You report all this on Schedule-C. Ideally you need to take stock of your inventory on the first day of the business of the year and again on the last day of the year ----- on your daily ledger you have already entered all the incomes and all the expenses, including all the goods ( inventory ) that you bought to sell later.

These items for sale are used to compute Cost of Goods Sold (COGS) --- Total yearly expense on inventory + cost of inventory Carried forward ( from last year ) LESS cost of inventory remaining at the end of the year. Thus when you show your Gross income ( from this business ) one of the expense is the COGS. Supplies is another expense -- this is all the material that you bought to use in providing the service portion of the business like shampoo that you used for hair-styling on clients etc. etc. TurboTax will walk you through all of this.

Hope this helps