Appendix B: Business Self-Employment Desk Guide

Business (sale of goods and services)

Store-front business
Examples: Gift/craft shop, restaurant, gas station, florist

• Cost of maintaining store-front (rent, insurance, utilities, property taxes, etc.).

• Interest on the purchase of income-producing equipment and property.

• Payments on the principal of loans for income-producing property or equipment.

• Employees’ labor costs.

• Cost of supplies and goods sold.

• Advertising costs.

• Accounting and legal fees.

• Licensing fees.

• Professional and union dues.

• Mileage or transportation necessary to produce or continue income.

Gross nonexempt income must be verified.

In-home business
Examples: Tupperware sales, Avon sales, manufacturer’s rep., farmer, craft sales, room rent

• Prorated share of utilities, taxes, insurance, and maintenance, if the space is used exclusively for business.

• Interest on the purchase of income-producing equipment and property.

• Payments on the principal of loans for income-producing property or equipment.-Allow only the costs identified for the part of the home used exclusively for the business.

• Employee’s labor costs.

• Cost of supplies and goods sold.

• Advertising costs.

• Accounting and legal fees.

• Licensing fees.

• Professional and union dues.

• Mileage or transportation necessary to produce and continue income.

For nonexempt self-employment income, all business costs must be verified to be allowable deductions.

Verification can be by gross receipts, invoices, daily or monthly ledgers, cancelled checks, bank statements, tax receipts, Schedule C of tax return or Schedule K of 1065 (for partnerships)

Cost of doing business must be verified as separate from household costs.

Commercial Boarding House

A commercial establishment that offers meals and lodging for compensation with intent of making a profit.

Identified costs necessary to produce and continue income.

Rental Property

Resident management—Owners reside in portion of rental property

Prorated share of taxes, utility bills, maintenance, and insurance costs (Proration is based on the percentage of rented area to total square feet.)

Utility bills, receipts, cancelled checks.

Nonresident management—Owner resides separate and apart from rental property.

All expenses other than depreciation, mileage, capital improvements, and payment on principal of mortgage.

Tax receipts, bank statement of mortgage interest, utility bills, receipts, cancelled checks

Room and Board

Three or more meals a day.

If payment is equal to or greater than the maximum benefit amount for the boarder group, subtract the maximum benefit amount or the actual documented cost of providing meals if the actual cost is more than the benefit amount.

Signed statement of each boarder stipulating the amount paid and the number of meals provided per day.

Gross nonexempt income must be verified.

For nonexempt self-employment income, all business costs must be verified to be allowable deductions.

One or two meals a day

If payment is equal to or greater than two-thirds of the maximum benefit amount for the boarder group, subtract two-thirds of the maximum benefit amount or the actual documented cost of providing meals if the actual cost is more than two-thirds of the benefit amount.

Verification can be by gross receipts, invoices, daily or monthly ledgers, cancelled checks, bank statements, tax receipts, Schedule C of tax return or Schedule K of 1065 (for partnerships)

Cost of doing business must be verified as separate from household costs.