We are a new Classical Conversations community set up as a single member LLC. We only had 2 students and so my tutor’s income was below the requirement for filing 1099s. Same for me. However, I saw that I shouldn’t be filing a 1099-NEC for myself. What should I be doing?
And what is considered profit for a CC community?
Thank you for emailing me your question about taxes and your Classical Conversations (CC) business.
As a single member LLC, you are a sole proprietorship and you report your income and expenses from your CC business on a Schedule C Profit or Loss from Business as part of your Form 1040.
All your income from the tuition and fees charged to your customers (i.e. parents) goes on line 1 Gross receipts or sales. In this example the total income is $4,500.
Your payment to your teacher(s) goes on Line 11 Contract Labor. In this example a total of $2,250 was paid to independent contractors. Other expenses go in the categories listed in Part II of the Schedule C. Other expenses made the total expenses sum to $2,982 as shown on Line 28.
The profit is shown on Line 31. It is calculated from Gross Income (Line 7 on the form) minus Expenses (Line 28). The profit is what you get to keep (and pay taxes on!) as the business owner. In this example the profit is $1,518. This amount will carried forward to the Form 1040.
There is a lot to learn about running a business. I have a webinar and ebook to help you understand the tax implications:
The ebook Taxes for Homeschool Business Owners is a great resource for:Tutors or teachers for a homeschool program paid as an Independent Contractor, Classical Conversations(R) Directors, CC tutors’ Coaches, musicians, artists, etc. hired to teach at a homeschool co-op
My webinar Tax Preparation for Homeschool Business Owners should be a lot of help to tutors, non-employee co-op teachers and other homeschool business owners! You can watch the recording at HomeschoolCPA.com/HSBIZTAXES for a small fee of $10.
P.S. I am no longer preparing tax returns, so I recommend you find a local CPA to help you in preparing your tax return. To find a local CPA or accountant I recommend you try Dave Ramsey’s Endorsed Local Providers and Quickbooks Proadvisors. A lot of CPAs and accountants listed on these sites specialize in small businesses.