Income types for businesses
You must report all income that your business earned during a tax year. Depending on a type of income, it may be taxable.
Generally, income earned by a business in connection with its regular trade or business is subject to California tax if the business has sufficient contact with the State. Common income types that may be subject to tax include income from sales of goods, provision of services, rental income, and interest/dividend income.
Visit Apportionment and allocation if you also do business outside of California.
Gross income is gross receipts minus returns and allowances, minus costs of goods sold. Generally, gross receipts is all revenue that your business received during a given year from:
- Sales of goods
- Provision of services
- Other income producing assets or activities
Calculate gross receipts by adding all revenue received within a tax year without subtracting returns, allowances, costs of goods sold, or any other business expenses.
How to report
Report your income when you file your federal return.
|Business type||Form(s)||Where to include|
|Limited Liability Company||Schedule B|
|Sole-proprietorship||Schedule C (federal)|
|Charities and nonprofits||Receipts and Revenues section|
Visit Forms to get prior year forms.
Rental income includes money collected by your business, a landlord, from third parties, tenants, for:
- Using real property, e.g., apartment, building, etc.
- Using personal property, e.g., car, boat, clothing, etc.
Income can be:
- Amounts received from tenants for the monthly rent of property
- Payments by a tenant for cancellation of a lease
You must pay tax on any profit from renting out property.
Rental income from a business is a type of business gross income. Visit Gross income for more information.
Interest and dividends are a type of gross income and should be included in your total income. Visit Gross income for more information.
Sale of capital assets
Most property you own and use for business purposes or investment is a capital asset. Capital assets can be tangible or intangible property.
Common tangible property includes:
Common intangible property includes:
Proceeds from a sale of capital assets are a type of gross income. Visit Gross income for more information.
Other income types
Your business may have to report other income types not listed here. Consider working with a tax professional.
1099s (information returns)
An information return is a tax document that banks, financial institutions, and other payers send to your business and the IRS. It reports non-employment income paid to your business during a tax year.
Common income types reported on a 1099 include:
- Proceeds from stock sale
- Cancellation of debt
- Proceeds from sale of real property
Visit 1099s (information returns) for more information.