Self proprietor tax question?

I own my own small re-selling business. Am i able to claim my hourly labor cost on my personal income taxes as a write off? Or am i simply billed from uncle sam on my profit margin?

9 Answers

  • 8 months ago

    Unless you have an employee, you DO NOT HAVE labor costs.

  • 8 months ago

    Your profit is your income.  Look at it this way, if you deducted to value of your labor as a business expense you would have to report the same income as wages and would break even.

  • 8 months ago

    You cannot claim a "cost" for your own labor. If you pay someone else to work for you, then you claim the cost of their labor.

  • 8 months ago

    If you are in the USA, when you complete your taxes you will do the business portion on the Schedule C.

    - On schedule C you will list all your expenses.  If you are paying employees, this is included as an expense. 

    - As a sole proprietorship, for work you do, you do not get paid a wage (not hourly or salary).  You are paid in profit of the business.

    All expenses except some entertainment / travel costs are a 100% deduction in your taxable income.

    - If employee #1 earns $14 an hour, then your taxable income is reduced $14 for each hour this employee works.

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  • 8 months ago

    You get taxed on profits. You cannot deduct for personal labor. You can deduct costs you pay someone ELSE.

  • Eva
    Lv 7
    8 months ago

    You do not write off your own labor. You pay taxes on the net profit of your business.

  • 8 months ago

    No, you can never deduct your own labor as a sole proprietor.

    Even if you could, there would be no benefit because you would have to claim the "payment" as income. For example, you value your labor at $10,000. If you paid yourself, you would deduct the $10K on your schedule C but have to claim 10K as income on your 1040. It would be a wash.

  • Anonymous
    8 months ago

    If you are self-employed, you will file a schedule C with your 1040.  While there is a line for labor, it is not for you.  Your net profit will be your self-employment income and subject to both income and SE tax.  The same is true of partnerships.

    Di *not* set up a corporation just to give yourself a w-2.  You would spend far more....

  • A.J.
    Lv 7
    8 months ago

    It depends upon how the business is legally structured.

    If the business is set up as a corporation of various types, you could be an employee of the business you own. The system is set up to make rich people richer, and you may be able to take advantage of the way things work.

    I'm not an expert, but I know variations exist, like an LLC.

    You can bury your profits in the business. 

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