QUESTION 1: I hired a CPA my dad has used for years. It's just me and the wife and we run www.braidsbybreslin.com, she does hair which is all cash money and we are also starting to sell DVD's. From the DVD's it's about 500-700$/month. My CPA said no biggie, just hold all your reciepts and we'll do a Schedule C on you and you'll be fine. Is it as easy as that?

QUESTION 2: If this year we have spent 6,000$ on our business but only made 3,000$, will I pay taxes on this, how does the 6,000$ come off?

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Ricky E. Breslin
www.braidsbybreslin.com

Well...

Answer to Question 1: Its no biggie if your wallet is a biggie.

A CPA usually charges by the minute (I do and everyone I know does) and if he has to spend time going through your paid receipts and adding up your deductions you will pay for it. I would suggest that you prepare some sort of documentation of your business activity to save the CPA work time and yourself some dollars. Suggest you look at a 1040 Sch-C and prepare your summary to have totals to put on the form.

Answer to Question 2: Look at form 1040 Sch-C and you will see that you will report the gross income of $3,000 and list your expenses by type on each line that will total $6,000 leaving you a loss of $3,000 that will carry forward to 1040 page 1 and subtract from any other gross income you have such as W2 income. This of course is assuming the $6,000 you spent is all deductible and deductible in the same year. If some of your expenses are not deductible you could have a profit instead of a loss.