Tax Consulting, LLC.

Case Study

You started a business as a sole proprietor called Tax Consulting, LLC. You provide tutoring services to college students to help them pass the Enrolled Agent exam. As a part of your tutoring services, you sell authorized copies of Gleim’s textbook. In addition, you operate on a cash basis of accounting.

Fast forward: You’ve been in business for a full year, and it’s now time for you to file your Schedule C Form. Assume you gathered the following information:

Tax Consulting, LLC Business Expenses

1. You collected $100,000 in cash for tutoring services.

2. You have 10 hours of tutoring for the last week of December that was not billed to students at the rate of $60 per hour.

3. The total rent for your office is $2,500 per month.

4. Utilities total $1,800 for the year.

5. You paid a part-time receptionist $5,000 to answer the phone and make appointments.

6. You paid yourself a salary of $25,000 for the year.

7. Your total costs for office supplies, such as pens, paper, etc., totaled $3,000 for the year.

8. You decide that the education system is lagging in your city, and you donate $1,000 to your local high school.

9. You purchased 50 Gleim books for $5 each and you sold 35 of them for $15 each.

10. The total miles on your automobile for the year equal 10,000 miles of which 2,000 miles were for business purposes. Assume the mileage rate is .545 cents per mile.

11. Depreciation expense on office furniture is $500 for the year.

12. You paid $4,000 for personal health insurance for the year.

13. You take prospective clients out to lunch to discuss services. Your cost for meals for the year is $2,000.

14. Your advertising costs total $100 for the year.

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