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.

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 or 1120A (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 1120A U.S. Corporation Short-Form 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