Home |IRS Tax Return | How do I file as a sole proprietor as a person who completes online tasks for extra income? I also have an online business that I haven't officially launched yet, do I need to report that on my taxes to IRS for losses of any expenses I have put into it?

How do I file as a sole proprietor as a person who completes online tasks for extra income? I also have an online business that I haven't officially launched yet, do I need to report that on my taxes to IRS for losses of any expenses I have put into it?

Robert James, 20+ years of experience in IRS matters
Answered on September 20,2023

My Free Taxes from United Way has some guides that you might find helpful - they help you prepare to file taxes, and also show you where to enter things in the tax software they use (which is a version of TaxSlayer).

MyFreeTaxes Self-Employed Tax Guides

If you are doing online tasks you might not get any 1099s. You would still add up your income and report it as Gross receipts on the Schedule C, which usually is listed as Self-employment income in tax software.

You can't usually claim expenses for a business without also having income in the same tax year. For example if you are planning to start selling shoes online, but won't start until next year, you would want to know how much you spent on shoes this year and enter that cost as Beginning inventory in the Cost of Goods section of the Schedule C. This type of business - reselling - isn't covered in the My Free Taxes guide.

Other costs might be considered start-up costs that you start amortizing the first year you have income. This IRS page has some examples but not a great explanation:

Here’s how businesses can deduct startup costs from their federal taxes

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