Taxes and a profit & loss statement


T

Ty

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,
 
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M

Mark Bole

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

Your federal income taxes are not generally deductible (although some
states may allow a deduction on the state income tax return).

Your state income taxes are deductible on your personal Schedule A,
assuming you are a sole proprietor.

Other types of taxes (such as payroll tax, sales tax, property tax) that
are attributable to your business would go on your Schedule C under
"taxes and licenses".

-Mark Bole
 
P

Phil Marti

What section can I place taxes on a profit and loss statement?
If you're preparing this for your own use put it where it makes sense
to you. If you're doing it to submit to someone, ask them. I'm too
many years removed from Accounting 101 to remember the "right" way to
do a P&L, but it really doesn't seem important to me.

Phil Marti
VITA/TCE Volunteer
Clarksburg, MD
 
T

Ty

If you're preparing this for your own use put it where it makes sense
to you.  If you're doing it to submit to someone, ask them.  I'm too
many years removed from Accounting 101 to remember the "right" way to
do a P&L, but it really doesn't seem important to me.

Phil Marti
VITA/TCE Volunteer
Clarksburg, MD
I don't have a paystub. I need the this P&L slash income statement
not for myself. There are others such as mortgage and creditors
asking for it since I am a contractor. I know I'm gonna have to pay
taxes for the year so I was curious where should I place it. Because
on a normal paystub it will show the deductibles if I was working for
a company.

They don't know where to place TAXES on the P&L or at least are not
telling me. They asked me to go to the internet to find examples.

fyi--- I'm curious for myself at this point. I was unemployed for a
very long time. I have been dependant on companies to take the
deductions. Now, I'm on my own. I need to know what I will be paying
for taxes so I don't be surprised on April 14th or April 15th.

Any help will be greatly appreciated...
 
M

Mark Bole

If you're preparing this for your own use put it where it makes sense
to you. If you're doing it to submit to someone, ask them. I'm too
many years removed from Accounting 101 to remember the "right" way to
do a P&L, but it really doesn't seem important to me.
[...]
They don't know where to place TAXES on the P&L or at least are not
telling me. They asked me to go to the internet to find examples.

fyi--- I'm curious for myself at this point. I was unemployed for a
very long time. I have been dependant on companies to take the
deductions. Now, I'm on my own. I need to know what I will be paying
for taxes so I don't be surprised on April 14th or April 15th.
In my initial reply, I mis-read your request and answered as if you were
asking about Schedule C, not a generic P&L. However, you could do worse
than to model your P&L after Schedule C, using similar titles for
expense lines.

Now you are also asking, how to not be surprised come April when your
tax return is filed. You should probably consult a professional, since
this is your first year in business for yourself.

-Mark Bole
 
P

Phil Marti

fyi--- I'm curious for myself at this point.  I was unemployed for a
very long time.  I have been dependant on companies to take the
deductions.  Now, I'm on my own.  I need to know what I will be paying
for taxes so I don't be surprised on April 14th or April 15th.
I don't usually post "me too" comments, but had I known the back story
before my initial response I would have said exactly what Mark says.
It's crazy to start a business, and that's really what you're doing,
without a session with a good accountant. It will more than pay for
itself over time. You have much more important issues to address than
how to format a P&L.

Phil Marti
VITA/TCE Volunteer
Clarksburg, MD
 
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G

Gene E. Utterback, EA, RFC, ABA

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
 

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