I have a friend whom I provide services for, and he has a question about how he accounts for the cost in his income tax submission.
Essentially he is a one man self-employed business, running workshops sold mostly over the internet. He's in the US, and works all over the world, I'm in the UK. I run the administration side of things, taking bookings and dealing with clients, and am also responsible for promoting him and the workshops. My plan is to invoice him, and I would think he can then treat this as a tax-deductible expense incurred in generating his workshop income. Is this correct?
He's mentioning something like "on schedule C on the american 1040 tax form there's no line for anything like that, the closest thing is a line for advertising expenses, office expenses, or utilities, none of which really fit the bill"
I am not a tax person and think the best advice would come from them.
However it seems a fairly straight forward question. A company or self-employed person must report all its income. A business may have legitimate expenses. Profit is income less expenses. Profits are taxed.
I don't see how your expense is any different that his utility bill, phone bill, etc.
An accountant that specializes in small businesses might be the best investment that he makes. And that cost is treated as a business expense.
He can write it off as labor or contractor. There should be such option, if not just use Advertising Expense. The details of the type don't really matter. You pay the same taxes at the end. I write off many things as Advertising Expense, such as Hosting and Domain Name registrations.