| FORTUNE Small Business: | |
When to start filing your business taxes
Ask FSB fields a question about how much money you have to make to file as a business.
(FORTUNE Small Business) -- Dear FSB: How much do I have to make to claim a small, prepaid legal business? The company only brought in only $300-$500 last year. How should I file this under my taxes?
- Karen Alice Cobb, North Hollywood, Ca.
Dear Karen: Although the term "business" is not defined in tax code, it has been described as an activity carried on for a livelihood or profit, says CPA James Kellogg of Fullerton, Calif.
So, if you're attempting to make a profit or earn a livelihood from offering prepaid legal services, you would qualify as a business, Kellogg says.
Indeed, Internal Revenue Code Section 16 defines gross income to include income "derived from business" and "all income from whatever source derived," Kellogg says.
File any business income and expenses on the "Profit or Loss From Business" Schedule C along with your individual 1040 form, Kellogg says.
Should you incorporate or otherwise change your operation's tax status, your filing requirements may change. For example, an S-corporation would report income instead on Schedule E.
Remember that if you're reporting a net loss, you cannot claim a home office deduction, says Los Angeles-based CPA John Stoller. 
More tax advice from the archives:
Cut your tax bill with write-offs
What can self-employed workers deduct?
5 smart tax moves
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