Get the free c instructions 2020-2021 form

hi this is John again with PDF tax were working with Schedule C today were going to try to give you a idea how this form looks works this is the form that you would use that you would attach to your individual income tax return 1040 if you had a business and you were a sole proprietor in other words you were working you were the owner and youre working by yourself you dont have any partners and you didnt incorporate your business in any way so you would fill this form out and attach it to your Schedule C is your form 1040 to show your profit or loss for the year so lets just start out by filling in some basic information here just take me a few minutes here to do this and were going to say that this that Jeff Jones has a manufacturing business where he creates leather handbags so like that and his business name is leather works like that now we need to come up with a business code and to do that were going to go to the instructions for Schedule C which has the business code so if we go down here and we look under leather and allied products the code we want is three one six nine nine oh so well go back up here and enter three one six nine anal like that whoops nine nine oh and the business address is I dont know some address we dont need an employer ID necessarily unless he applied for one you can just use your social security number if you dont have an employer ID now we need to fight and we need to decide what the accounting method is and were going to say that this business has inventory so well need to use the accrual method which is that right there and then did you materially participate and what other words did you spend your time working in this business and Jeff certainly did because thats his its his 100 business and thats what he does full-time so were gonna say yes here did you start in 217 no did you make payments that would require filing to 1099 he probably did because he made payments to a purchase inventory so itll say yes and did you file them and well say yes again so that is the big basic information right there now lets go ahead and enter some numbers so we can see how this form works and on line one we need to put our sales so well suppose that he had a 150 thousand dollars in sales for the year and then he didnt necessarily have any returns he might have but well leave that blank and cost of goods sold is the next big thing that we need to look at so thats that comes from line 42 so lets scroll down here tie line 42 this section here where we have cost of goods sold and first thing we need to do is decide what method of inventory we use for valuing and inventory and probably hes going to use the cost method which is the most and was there any change in the cost in valuing the inventory well say no there was no change so the inventory that began the year these would be the leather that he uses to make his handbag so lets say he had five thousand dollars in inventory at the beginning the air and then how much did he purchase...