A quick tax question for NY/USA.
Say an online shop sends me a 5k check in my name and not under a corporation, to order 300 glass cups.
And I'm sort of the middle man and I will be using 4k that I got to order the 300 cups from the factory in China. That would leave me with 1k profit after all expenses are paid.
Since I'm receiving the money as a sole proprietor, will I be taxed on the 5k or 1k?
Generally, it may look like this:
That is to say, your sale of 5000 USD is broken down as
Profit = (all sales) - (all expenses)
So the 1000 USD "gross" profit you earned is only then subjected to taxation.
1000 USD = (5000 USD) - (4000 USD)
The 4000 USD you spent is basically your cost/expenses.
Generally you deduct your business expenses from your business income, and pay taxes on the net profits remaining. In the US, for a sole proprietor, this is calculated on Schedule C of your yearly tax return (form 1040).