Starting Your Business

What is Business Income?

If there is a connection between any income you receive and your business, the income is business income. A connection exists if it is clear that the payment of income would not have been made if you did not have the business. Business income is income received for products or services sold.

You can have business income even if you are not involved in the activity on a regular, full-time basis. Income from work you do on the side in addition to your regular job can be business income.

If you are a sole proprietor, you will report your business income on Schedule C or Schedule C-EZ. If your business is a partnership, you will report your business income on Form 1065. If your business is a corporation, you will report your business income on Form 1120 (Form 1120S if it is an S corporation).

The Business Income section of Publication 334 explains what is business income and what is not.

Important References:

Form 1065	U.S. Partnership Return of Income
Form 1120	U.S. Corporation Income Tax Return
Form 1120S	U.S. Income Tax Return for an S Corporation
Publication 334	Tax Guide for Small Business
Publication 525	Taxable and Nontaxable Income
Publication 541	Partnerships
Publication 542	Corporations
Schedule C	Profit or Loss from Business
Schedule C-EZ	Net Profit From Business