Individual Income & DeductionsACCT 430 – 2001B-01Crystal Rueda03/12/20
Calculation of net business income:Income Calculation•Your business income is calculated, starting with gross receipts or gross sales. Returns and allowancesare deducted.•Then, cost of goods sold is calculated, for businesses that sell products.•The result is the gross profit (gross business income).•Other income is also listed. For example, your business may have income from interest, tax credits, orother non-sales sources.
Expenses Calculations•Expenses are listed, in specific categories, in alphabeticalorder. There is a category for miscellaneous expenses too.The result if total expenses before use of your home(called tentative profit or loss).•If you have a home bases business, you can do a separatecalculation for home business expenses, and add those tothe tentative profit/loss. (There are two methods tocalculate these expenses).