Gross Income Question

[hedgecat]

I am a self-employed sole proprietor of a business that sells goods and services. I've come to the section where the software is asking

"State the gross amount of income the debtor has received from employment trade or profession or from operation of the debtor's business including part-time activities either as an employee or in independent trade or business from the beginning of this calendar year to the date this case was commenced. State also the gross amounts received during the two years immediately preceding this calendar year."

1. I'm a little confused as to what they mean by "income". Of course, I know what my Quickbooks says I took in...and what went out. I am not technically an employee and don't take a normal salary. So, are they referring to gross receipts of the business?

2. 1. Do they want the second part of the question broken out by year or should I combine the two years?

I feel naive asking these questions but I don't want to put down gross receipts without being able to qualify that it's not actual income.

Thanks!

[hedgecat]

Let me just say that by looking at the NOLO book, I see how to enter these. I'm still confused at to what they are considering "income".

[HHM]

If you are self employed, I STRONGLY suggest you not do your BK Pro Se. Go hire an attorney. Too many pitfalls.

For the self employed, for BK purposes, your gross income is "gross revenue." But then you back out Cost of Goods Sold, Biz expenses, etc. But the income is actually Gross Revenue on Part II.

If you have the NOLO book and you can't figure out what to do, that IS THE SIGN that your case is probably not one that should be handled pro se.

[hedgecat]

If you are self employed, I STRONGLY suggest you not do your BK Pro Se. Go hire an attorney. Too many pitfalls.

For the self employed, for BK purposes, your gross income is "gross revenue." But then you back out Cost of Goods Sold, Biz expenses, etc. But the income is actually Gross Revenue.

If you have the NOLO book and you can't figure out what to do, that IS THE SIGN that your case is probably not one that should be handled pro se.

I appreciate the suggestion and the answers to my questions! Thanks very much.

[tigergem]

Hey hedgecat. Listen to HHM. My bk is pretty simple, I think, really, but being pro se is really really difficult. And if you are doubly unlucky to be in a district that is not pro se friendly you could be in a heap of trouble. If I could have afforded an attorney I would have happily paid the fees to not have the stress and learning curve that this involves.

[simplicityof]

I am a self-employed sole proprietor of a business that sells goods and services. I've come to the section where the software is asking

"State the gross amount of income the debtor has received from employment trade or profession or from operation of the debtor's business including part-time activities either as an employee or in independent trade or business from the beginning of this calendar year to the date this case was commenced. State also the gross amounts received during the two years immediately preceding this calendar year."

1. I'm a little confused as to what they mean by "income". Of course, I know what my Quickbooks says I took in...and what went out. I am not technically an employee and don't take a normal salary. So, are they referring to gross receipts of the business?

2. 1. Do they want the second part of the question broken out by year or should I combine the two years?

I feel naive asking these questions but I don't want to put down gross receipts without being able to qualify that it's not actual income.

Thanks!

I wouldn't rule out Pro Se. The questions that seem difficult are the ones you need to be thorough with answering. If the question seems vague, the last thing you want to do is make it not your problem, whether you have an attorney or not.

Income is obviously the numbers found on your 1040 tax transcripts. Can't be other than that right? If it's from self employment only, 1040 schedule c should reflect the gross income or profit you made after you figure your expenses and before your se tax.

[HHM]

I wouldn't rule out Pro Se. The questions that seem difficult are the ones you need to be thorough with answering. If the question seems vague, the last thing you want to do is make it not your problem, whether you have an attorney or not.

Income is obviously the numbers found on your 1040 tax transcripts. Can't be other than that right? If it's from self employment only, 1040 schedule c should reflect the gross income or profit you made after you figure your expenses and before your se tax.

That is not exactly how it works in BK.

For purposes of part I means test, income is Gross Revenue. You only get to back out biz expenses on part II. Self employment cases ALWAYS receive more scrutiny, reason being, you are in control of both the record keeping and the pay out. As such, you can expect the trustee to want 2 years of records. They are looking for any reason to kick you out of chapter 7. That is why it is fairly foolhardy for the self employed to try chapter 7 pro se. I am not saying it is impossible, but you should really think twice about it, you only file pro se if you have no other choice. The problem is, most people have a choice, they just don't "want" to (which is foolhardy arrogance).

[hedgecat]

I have talked to 3 attorneys who all say my case is pretty straightforward. I am basically unemployed - I am so far under the means test, it's not even funny. My self employment doesn't come close to paying the bills, hence the need to file. If the trustee wants two years worth of financial info, he/she can have it. I keep a very accurate QuickBooks file, have every single receipt, bank statement, credit card statement and tax return.

As far as whether I will file pro se - not sure yet. I'll keep researching and asking questions and in the meantime, expenses will keep hitting me and that $299 filing fee looks more and more like the only option. I'm not one of those in the camp that probably could pay but just won't.

[hedgecat]

I just want to clarify that my original question wasn't about the means test. I was referring to the "Statement of Financial Affairs".

That is not exactly how it works in BK.

For purposes of part I means test, income is Gross Revenue. You only get to back out biz expenses on part II. Self employment cases ALWAYS receive more scrutiny, reason being, you are in control of both the record keeping and the pay out. As such, you can expect the trustee to want 2 years of records. They are looking for any reason to kick you out of chapter. That is why it is fairly foolhardy for the self employed to try chapter 7 pro se. I am not saying it is impossible, but you should really think twice about it, you only file pro se if you have no other choice. The problem is, most people have a choice, they just don't "want" to (which is foolhardy arrogance).