Filing Small Business Tax Returns – Options, Schedule C Help 1

UPDATE: Scroll down to the bottom to track the current status of the case study

I started this blog several years ago as an attempted creative outlet from my hours pouring over tax return after tax return. I didn’t really expect many people to read it, and I certainly didn’t expect to make much of it. Somewhere along the way, I started writing about accounting and taxes, and actually enjoyed taking those numbers I stared at all day and make them dance in new and exciting ways.

Since turning this into a tax blog, I’ve started receiving more questions about specific tax situations. I don’t mind, since it’s often a fun puzzle to fit their situation into the Internal Revenue Code. But, other than the one off tax help column, I haven’t really dedicated much time to actually putting the answers into written form.

This, despite the fact that I’m often on Quora finding new questions to try to answer.

So for the next several weeks I’m going to try something new. It’s time for a Case Study.

Here’s the situation (unless my wife decides she doesn’t like it): The beautiful Amy decides to start up her own business selling amazing nail wraps that put fun designs on your nails (which you can totally buy right now). I’m planning to look into Amy’s business step by step for the tax consequences and see if I can’t give some help filing tax returns by answering some of those general questions that so many people have and are often obtusely answered through Google.


And don’t forget about the nails

I have no idea how it’s going to turn out, since I don’t have any particular outline. If you do have any  questions that you’d like worked in here, let me know (just message me on Twitter or post a comment) and I’ll see if I can get them answered within the case.

I should note, and I’m working to update my footer so it’s on every page, that none of this qualifies as tax advice. Yes, I’m a CPA registered in the State of Colorado, but I don’t know the specifics of your situation (even if I’m answering your specific question) and I’m not signing your return. As such, while the information on this site might help push you in the right diction, it cannot and should not be solely relied upon while filing your return.



Part 1: Which Business Entity Should Amy Choose?

Part 2: Cash vs Accrual Method of Accounting

Part 2a: The Hybrid Method

Part 3: Filing a 1040 Schedule C, which is broken into the following sections:

Miscellaneous questions-

  1. 1099 Requirement
  2. Material Participation

Schedule C Income

Notable Expenses-

  1. Vehicle Expense
  2. Depreciation & Section 179
  3. Home Office Expense
  4. Meals and Entertainment
  5. Self Employment Retirement Plans
  6. Deductible Travel Expenses
  7. Health Insurance
  8. Club Dues
  9. Business Gifts

Part 4: Selling the business

Other Info: Net Operating Losses

Like I mentioned above, if there’s anything you’d like covered that’s not included above, please let me know.

For information on filling out the 1040, I’ve moved the summary over to this page.


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  • christian

    Great article. Thanks for the info, it’s easy to understand. BTW, if anyone needs to fill out a Form 1040 – Schedule C, I found a blank form here: