For any business, any source of revenue less adjustments equals gross receipts. Revenues can come from various sources including sales, interest income, service income, and one time type of transactions. Typical adjustments include returns of products i.e. you write a check back for a customer dissatisified with a product or service, allowances for non payment, returned checks of customers. The adjustments are subtracted from revenue and you get gross receipts. In some industries, commissions paid for royalties and marketing items are adjusted to revenue to determine actual gross receipts. A simple answer is the actual cash you receive.
The sole proprietorship is taxed at the individual tax level. Basically, the income earned during the calendar year is calculated on Schedule C of Form 1040. The final number is transferred to the front page […]