From: kiev@MIT.EDU
Message-Id: <9403150056.AA03327@m66-080-9.MIT.EDU>
To: carolingia@bloom-beacon.mit.edu
Subject: Re: autocrat's pledge
In-Reply-To: Yevsha's message of Mon, 14 Mar 94 16:54:40 -0500.
             <9403142154.AA01175@bridge.sug.org>
Date: Mon, 14 Mar 94 19:55:59 EST

Yevsha writes:

> Despite what Harald says, deductions for expenses are not done on a
> dollar per dollar basis.  Taxes are figured on gross, with some
> deductions for expenses (cost of goods, etc), but if you breakeven you
> are still liable for taxes.

Wow, Aleks -- if that's how you do your tax accounting, it's no wonder
your company's in Chapter 11.    ;^)

Seriously, I can't be the only person here who's ever run a sole-
proprietorship business.  The bookkeeping's really not that hard:

First off, take a look at a Schedule C so you'll have a reasonable idea
how to categorize your expenses.  Then keep good records, including
keeping all receipts.

For *each* business you run, you fill out a Schedule C -- on which
you record income in a few categories and expenses in several more.
The bottom line on a Schedule C is income less expenses -- i.e.,
net income from that business.  (It gets a bit more complicated
if you acquire amortizable property or spend money on business
meals, but neither of those should be of concern to an individual
running as a home-business the occasional medieval re-creation
event.)  The bottom line of your Schedule C (or the total of the
bottom lines of your Schedule Cs) is then entered into the appropriate
line on your 1040.  Your taxes are then based on that figure, plus
what ever other income goes into the gross taxable income on your
1040.  (For me, the worst thing about having income from a sole
proprietorship is having to use the bloody 1040 long form.)

--Alex