You will be required, as a self - employed individual, to report you business profits or losses on Schedule C of Form 1040. Your net business income is taxable to you as an individual. Don ” t make the mistake made by one misinformed individual who was netting about $10, 000 a year and ‘ investing ‘ the income in collectibles. Since she thought she was not withdrawing any money from the business she had no tax liability. The IRS showed her the error of her ways, after an extensive audit, by hitting her with a large tax bill which included interest and penalties.

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