Don't overlook these!
Updated for 2012
Line 1: Gross receipts
Enter your Gross receipts for the tax year here. This is income earned from your services or sales of merchandise.
Line 2: Returns and allowances
Sales returns and allowances are deducted from gross receipts.
If you sell merchandise, it's a good practice to keep a separate account for Sales Returns and Allowances.
Then, at year end, you merely enter the total from this account on the Returns and allowances line and subtract it from Gross Receipts.
Subtract returns and allowances from gross receipts and enter the result on this line.
Line 4: Costs of Goods Sold
If you self merchandise you need to figure the cost of goods sold and enter that amount on line 4.
Cost of goods sold is figured on page 2, part III.
Line 5: Gross profit
Subtracting cost of goods sold from the amount on line 3 results in Gross profit.
Line 6: Other income
This is income not directly related to your service or sale of merchandise.
For example, interest on funds in your business bank account.
Line 7: Gross income
After adding other income (if any) on line 6 to gross profit on line 5, you end up with gross income.
Copyright © 2008-2013 Larry Villano. All rights reserved.