Ty said:
What section can I place taxes on a profit and loss statement?
Is it a percentage in a column like the cell phone bill? 28%?
I'm a contractor. I know my monthly salary which is 1099. I know my
cell phone bill...etc. I have placed everything on the statement. I
don't know how to represent Taxes or what section to place Taxes into
the statement.
I have the following sort of figured out:
Total Revenue
Total Cost of Sales
Gross Profit
Sales Revenue
Thanks,
You need to get with an accountant NOW, for several reasons.
First - most lenders, especially once they realize you're self employed, are
going to want a confirmation letter from your accountant. They will almost
never take YOUR word for your income.
Second - the question you asked is NOT the question you need an answer to.
Its a bit too convoluted to go into here, but where and how you "book" taxes
depends on how you report the income and pay the tax. If you report on a
Schedule C, as part of your personal income tax return, or you're operating
a Pass-Through Entity, like a business trust, S corporation, partnership or
LLC, you do NOT report any income tax as part of the business operation.
This is because the income tax is not assessed at the entity level, it gets
assessed at the individual level and the amount of tax due is based on your
aggregated income, not just your business income.
Third - there are many (MANY) variations of what an income statement should
look like. Much of it is driven by the your industry, income levels, and
the method of accounting you use. And your accounting method is driven to
some degree by your industry and income levels. So without knowing a lot
more about what you do you're not going to get a good answer here.
I would encourage you to meet with a local tax accountant to discuss your
situation. If you're really a small contractor and use a Schedule C to
report your business operations, you can likely simply give the lender a
copy of your tax returns - it is highly likely they are going to ask for
them anyway.
Good luck,
Gene E. Utterback, EA, RFC, ABA