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Im an IT professional and receive a W2 from my day job. Recently

I'm an IT professional and...
I'm an IT professional and receive a W2 from my day job. Recently I have been generating business as a sole proprietorship as a side business. I don't get a 1099; I invoice my clients and they pay to the business. I obviously have to report this next tax season but I'm not sure how. I imagine I will be using schedule C but how do I prove what I am receiving; is a paid invoice enough? Or bank transactions? Are there other things I should be thinking about that I am over looking?

Location: NY
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Answered in 2 minutes by:
5/16/2012
InfoTaxes
InfoTaxes, Tax Preparer
Category: Tax
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Experience: CTEC and IRS Registered Tax Return Preparer
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InfoTaxes :

Thank you for using JustAnswer.com I will be more than happy to assist you!


You will use schedule C and it is better if you open a bank account for your business, keep your business income separate from your regular income


 


 


 


 

InfoTaxes :

See schedule C-----> http://www.irs.gov/pub/irs-pdf/f1040sc.pdf


 

InfoTaxes :

Make sure you keep the invoices so you can show the IRS in case you get an audit letter

InfoTaxes :

If you are going to use your car for your side business make sure you keep a mileage log


 

Customer:

If I am audited will my business bank account be enough?

InfoTaxes :

Your business bank account will be good but remember most of the time they want to see invoices and receipts specially if you have expenses


 

Customer:

So an invoice a generated on my computer for my client is enough proof. Couldn't anyone produce an invoice?

InfoTaxes :

If you can you can purchase an accounting software like Quickbooks to keep your business records in order


 

InfoTaxes :

If you have an invoice and then you deposit the money into your business bank account the IRS will see that the money went to your bank account and they will also be able to verify the customer name and address


 

Customer:

Ok so they will not need to bother my clients by contacting them to prove any business transactions, correct?

InfoTaxes :

They IRS won't bother the IRS unless they find something ilegal and/or irregular


 

Customer:

ok. Thank you.

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