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45 | P a g e October 25 Note: It is the applicant’s responsibility to provide “workable” documents. Applicants must organize their records in a format that can be used for calculation of business income, expenses, and, if necessary, losses. Note: Odd jobs are considered Self-employment even if the client doesn’t consider themselves self-employed. Sub-grantees are not required to put together profit/loss information from “pieces” of business records. It is the applicant’s responsibility to provide complete records. Sub-grantees may calculate self-employment in one of three ways: 1. Annual Gross Receipts (all self-employment income before deductions for full twelve months) minus self- employment deductions. (This calculation would use actual deductions). (Depreciation is not an allowable deduction.) 2. At the request of the applicant, the Sub-grantee may use annual gross receipts (twelve months) multiplied by 60% (0.60) to calculate self-employment. (This is a straight calculation and does not require the Sub-grantee or applicant to calculate actual deductions). 3. Annual self-employment income may be calculated based on the federal income tax return for the calendar year immediately preceding the calendar year in which the application is filed. SELF-EMPLOYMENT STRUCTURES There are many types of self-employment structures. Some of the more common structures are: 1. Sole Proprietorship: A self-employment business that is not incorporated and has one owner. The business income and liabilities are the responsibility of a single owner. 2. Partnership: A self-employment business set up with two or more partners. In addition to personal income tax forms, partnerships are also required to file 1065 and K-1 forms. The business income and liabilities are the responsibility of all the partners with the partnership defining shares of ownership and responsibility. Partnership income is determined in the same way as other self-employment. 3. Independent Contractor: An individual who pays their own employment taxes and does not have an employee/employer relationship is considered self-employed. 4. Sharecropper: If the sharecropper pays the costs of doing business and receives a portion of the net income in exchange for labor, the sharecropper is considered self- employed. The sharecropper is not considered self-employed if the sharecropper is not responsible for paying the costs of doing business.