Taxes and Revenue Vs. Profit

[AutoMedixDFW]

My question is, when Square reports my total "earnings" to the IRS at the end of the year, how will they know what is spent on buying goods to sell and how much was profit? For instance, if I make a sale of $100, but the goods cost me $50, I only made a $50 profit. So will I pay taxes at the end of the year on the whole $100 or just the profit I made? And how does Square know what my profit is? New to running a business and just need to know how this works. I don't want to be taxed on $100 if I only profit $50 because that would be double the tax! Also, I am a mobile mechanic, so parts generally can cost more than labor, which would mean I would pay wayyyy too much in taxes if I have to pay for total Revenue and not Profit alone... Please Help!!

[Minion]

HI @AutoMedixDFW Do you currently use any accounting software or have an accountant?  Personally I'm not good when it comes to taxes/filings/fees etc.  I use a free accounting software to categorize all of my things, and then hand over the reports to my accountant or my yearly sales tax and EOY filings. 

As for Square, I'm not sure if your business qualifies or not but you will only receive a 1099 K form if you process over $20k in Credit card sales (cash/check excluded) AND more than 200 transactions per calendar year. 

So more info here on that.

[AutoMedixDFW]

I keep track of my customer charges, parts cost, fees and profits via excel, so I can give the tax preparer that information. So, basically, square only reports what I've processed and I'll pay taxes based on my filings that I do on my own, not based on what Square reports (Revenue not Profit)?