So let's say that I am using some of my earnings from my regular job to buy food..
If my intention is to develop compost then I may buy: onions, garlic, newspapers, carrots, potatoes, eggs and sweet potatoes as my contribution to the home.
If my intention is to develop plants, then I may buy: most of the above, however I may add Pro Mix or one of the plant starters to get pieces of the potatoes, sweet potatoes, carrots to grow...
Now if I were to create and sell the "seedlings" of potato and pieces of sweet potato plants, then my cash inflow may be faster than expected. However if I were to keep them to create products to sell, then my income may be received at a later point in time....
If I were preparing my Cash Flow or my Profit & Loss, then I would have no " sources" of funding as basically I took some of the purchases and perhaps turned a profit... That is if I were like most persons and threw away the bills or did not copy them as they faded quickly. (Perhaps some of the "Groceries" may provide member statements with items purchased per calendar year which may be printed on regular paper, so that persons can have support for their tax return.)
Worse yet, if I picked up some slices of tomato with seeds or a whole tomato, planted the seeds and got a whole lot of crops, then I would have few expenses unless I decided to accrue for some rent which may reduce my profits.
However, In real time, I would have to weigh the produce, take pictures, get copies of the grocery bills and thus incur some type of cost which if I were filing an income Tax Return would allow me to claim some expenditure. In real time, that is difficult for the average person..... However...
The Income Statement for the Tax Return could be used to open a Bank Account and allow the person to move forward.
The funds in the "business" account would need to be kept separately from my other funds as I would need to pay myself and use my funds as I see fit.
I could open different business bank accounts or Unit Trust accounts to keep different sources of business income as I may sell some of the businesses at a point in time and the Bank account or Unit Trust Account for the Business may form part of the "history" of the business...
In real terms, I would move towards paying taxes every quarter, reduce my penalties and interest.
My lines of business may assist in tracking new businesses as there may be some exemptions on the payment of taxes with respect to new businesses...
So it just may be worth your while to track your lines of businesses or disaggregate your funds even though the income may seem minute..
Someone with a different eye may see some breaks that you may not see....
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