Tax people - can I do this?

[manlymatt83]

I'm a reseller for a webhosting company. I have about 10 friends who buy servers and hosting through me and such.

Can I legally do this as an individual, and then just declare the extra income as income on my taxes?

IE:

The monthly bill from said company is $500. I pay the $500, but with all my friends paying me, the total is $800.

Can I declare the extra $300/mo as just personal income? Or do I HAVE to start a company?

 

[Canun]

I guess you could report it as other income. But alot of times it is more beneficial to run it as a Sch. C. I usually deal with taxes on the forms, not the interpretation.

 

[manlymatt83]

Originally posted by: Canun
I guess you could report it as other income. But alot of times it is more beneficial to run it as a Sch. C. I usually deal with taxes on the forms, not the interpretation.

Schedule C? OK, but that would still be individual right?

 

[JS80]

Are you seriously going to report such trivial income? if you are going to then I suggest you expense your cell phone and internet too to offset the taxes you're going to be volunteeringly paying.

 

[dquan97]

I'd put it as Other Income on the 1040 form...

 

[EagleKeeper]

Originally posted by: dquan97
I'd put it as Other Income on the 1040 form...

As other income on the 1040 sets up up for full taxable income without the ability to expense off anything remotely related to the income.

Using the Schedule C can actually crate the potential for more expenses than income, thereby lowering your taxable W2 income.

 

[PokerGuy]

First, no, you do not have to 'start a company' for this, you can simply operate as a sole proprietor. Depending on the amount/nature of the income and your situation, it may or may not be beneficial to look at a partnership, LLC, or sub-S corp etc.

Second, in your scenario, your income is not $300, it's $800. You would use a schedule C to show your income / expenses from the business, so you'd have a total income of $800, then expenses of $500, and net profit of $300. You'd pay taxes on the profit. If you do this on a sched C, you could also include other expenses you might incur as part of this activity -- for example, if you have to invoice and collect payment from your customers, you can list the expenses for that and reduce your net profit.....