Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
If i were to create a business before the end of the year including (advertising, buying equipment, insurance and also traveling for training business related) but did not actually do a job for profit, how does that work when tax time comes?
Depends on how the business is legally structured. In many cases, you can move to offset expenses against other allowable income. There are also ways to allow business deductions while waiting a determination if this endeavor ends up being a legitimate business or just a hobby. Speak with your business accountant to get all the details, pros and cons, IRS rules and other options based on your very specific situation.
Depends on how the business is legally structured. In many cases, you can move to offset expenses against other allowable income. There are also ways to allow business deductions while waiting a determination if this endeavor ends up being a legitimate business or just a hobby. Speak with your business accountant to get all the details, pros and cons, IRS rules and other options based on your very specific situation.
I agree that you should speak to a tax accountant rather than accept answers from random people on the internet.
Giving you a bit of assistance, if you structure a business as an LLC or sub-S Corp, business losses and profits are passed through to your personal income, so your tax liability or benefit is based upon profit or loss. If you run the business as a sole proprietor you declare profit and losses directly on your personal tax return. Talk to an accountant on the pros and cons of each corporate structure.
Scale is also important. If you start a relatively modest business and lose a few thousabdfor a few years before you start to turn a profit, you are unlikely to hear from the IRS. If you lose for a few years and fold the business without making a profit, that puts you into a higher audit risk, and the IRSmay rule that it was a hobby business and disallow thedeductions you took.
Different types of expenses can be deducted in different ways. If you purchase anything that needs to be capitalized, you deduct depreciable value over a number of years.
I am not trying to give you a definitive answer, I am trying to point out reasons why you need to discuss this with an accountant.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
