Tiny Business Taxes for Software Sold
December 29, 2010 12:45 PM Subscribe
How should I be reporting Google Checkout and PayPal Express Checkout income and expenses to the IRS in 2011 for the 2010 tax year?
posted by alan to work & money (9 answers total) 5 users marked this as a favorite
This year I started selling an online software product using Google Checkout and Paypal Express Checkout. I'm going to be working with an accountant, but I'd like to enter the conversation with said accountant semi-educated. You are not my accountants, you are internet friends giving me informed opinions.
First Question: As I understand things (and please correct me if I'm wrong) neither Google or Paypal will issue me a 1099. Instead it's my responsibility, acting as a business, to keep track of sales for the year and report this as income on a Schedule C form. Is this correct?
Second Question, two parts: Both Google and Paypal charge a small percentage as a processing fee. When I'm reporting my income and expenses related to this
1. Should I be reporting the total sales prior to the processing fee being deducted, or reporting the total sales after the processing fee is deducted?
2. If I'm reporting the total sales prior to the processing fee being deducted, am I able to deduct the processing fee as a business expense?
Final Question: Are there any other gotchas that someone used to filing a Schedule C for 1099 consulting/contracting work should lookout for in the products world?