My daughter & I started a home based business selling clothing in Nov. I 'loaned' us start up money. We purchased inventory and supplies to start and made a few sales.

[davidsonveraj]

Started in Nov.  Purchased inventory and equipment.  A few sales, but not much.  We are not yet a legal entity - just Mother & Daughter.  I want to take credit for my investment and using my home & computer.  Where to start?????

[PatriciaV · Accepted solution]

Yes, this business activity would be reported on Schedule C of your tax return. Any profit would be subject to self-employment taxes.

Inventory, business assets, income, and expenses are all reported in the Business section of TurboTax Self-Employed Online. To find this section, search on "schedule c" to jump to the start of that topic.

If your daughter files a separate tax return, you will need to split the income and expenses between the two owners. Each owner would report their own percentage of the business activity.

Your contribution to fund the business is not a tax deduction. Instead, it is either a partner/shareholder loan to the company or it increases your equity basis in the company. Neither of these categories are included for tax purposes. However, you should record this in Quickbooks, or any other business accounting system you use.