Question by John S: Tax liability for a small, home-based business?
I’ve been thinking of opening such a business. How much money would I have to net before I am forced to start paying taxes? Or would it be based on gross profits? Would I have to file an income tax form, a separate business form or both?
Answer by Wayne Z
If this home business is your only income, you would start paying income taxes at $ 400 per year.
If this business is in addition to a regular job, you would have to report anything.
Most people file small home business on a Schedule C that goes along with your 1040. It makes your regular return more complex but it is not a separate return by itself unless you form a corporation which I would advise against right away.
The best advice that I could give you would be to sit down with a CPA or EA in your area and discuss the situation.
What do you think? Answer below!