Using quickbooks online, I'm able to generate my Profit and Loss statement and I see my Net Income for the year 2019. Is this the final Gross Income number that I will be reporting on my tax return or do I have to factor in other things?

I don't have any W2's as I run my own business fixing computers and selling items on ebay. And I have a LLC that I just file with my 1040.

1 Answer 1


First, Net income and Gross income are two different line items on the P&L. Second, the short answer is "you'll have to factor other things", maybe.

The P&L will have most of the components, but (depending on the thoroughness your Chart of Accounts), some elements may not be needed, others not clearly present, still others that are needed but not shown at all on the P&L.

You'll break down your gross income to categories that generally provide you metrics to determine the status of your business. A Taxable vs Non-taxable categorization is certainly helpful when working on sales taxes, for instance. But generally, your income will breakdown to total sales, any interest received, and capital gains on sales of assets. Interest and Capital Gains are usually not included as part of the gross sales and handled separately. Any additional breakdown of sales (region, type, etc) won't be needed.

For example, Depreciation Expense (the used amount of your assets during the tax year), generally appears on the p&L, but smaller businesses will sometimes overlook reporting Depreciation or even correctly reporting the assets. However depreciation is calculated on a separate assets & depreciation tax form, that will flow to the Business Income Schedule. Point is if you didn't include it in you CoA (or mis-stated it), then your Net Income would be overstated.

Inventories do not appear on the P&L, nor to their purchases (inventory increases), but the sale of inventory appears in your Cost of Goods Sold (COGS). Although, some affecting transactions (non-company use, shrinkage) should appear, but may not depending on your business experience. The inventory calculation worksheet will essentially assess the net difference (Beginning Inventory plus purchases less COGS less Ending inventory) as non-business usage and INCREASE the net income accordingly. If adjustments (such as shrinkage/waste) are not included, non-business use will be overstated, too.

Hope that helps.

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