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2023 will be my first tax year for my small business.
I'm a commercial equipment finance broker. I spend my day on the phone and emailing trying to get equipment vendors to send customers my way so I can help them get financing for the equipment they need (think mortgage broker but for commercial equipment). I got some things set up in like Q2 of 2023 but didn't really start "working" the business until maybe end of Q3ish and the business made less than $5k since it was just starting up. It has significantly grown in 2024 so far.
There's really not much overhead. I do some driving to visit potential customer locations to shake some hands. Some small marketing and website costs. And that's really about it. Outside of the obvious business costs what other things should I be looking to write off? I track my milage for business, I also switched my internet provider in 2023 so I could get a home phone line I was using for the business but decided to cancel it and just use my cell.
My home office is small, I maybe use 200sq/ft of my 2,800sq/ft house for business.
Curious if there's anything else I should be thinking of. I have an accountant, and he's pretty good about pointing things out especially on my rental property deductions, just want to make sure I'm not missing anything.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I had a business for 16 years and moved it to my home the last few years. I used a separate cell phone so I could define that expense, separate bank account for those expenses, and kept a careful log of business travel in the car. I accepted credit/debit card payments, that cost being also tracked, but for me the best part was that I was manufacturing, so materials and supplies were deductible. With a business license I was able to buy wholesale, no sales tax. There is also your business license, insurance, advertising, bad debts/bounced checks, and in my case equipment depreciation.
2023 will be my first tax year for my small business.
I'm a commercial equipment finance broker. I spend my day on the phone and emailing trying to get equipment vendors to send customers my way so I can help them get financing for the equipment they need (think mortgage broker but for commercial equipment). I got some things set up in like Q2 of 2023 but didn't really start "working" the business until maybe end of Q3ish and the business made less than $5k since it was just starting up. It has significantly grown in 2024 so far.
There's really not much overhead. I do some driving to visit potential customer locations to shake some hands. Some small marketing and website costs. And that's really about it. Outside of the obvious business costs what other things should I be looking to write off? I track my milage for business, I also switched my internet provider in 2023 so I could get a home phone line I was using for the business but decided to cancel it and just use my cell.
My home office is small, I maybe use 200sq/ft of my 2,800sq/ft house for business.
Curious if there's anything else I should be thinking of. I have an accountant, and he's pretty good about pointing things out especially on my rental property deductions, just want to make sure I'm not missing anything.
IRS has had rules for what qualifies for a "home office" for quite a few years now. With only $5k profit in 2023, it may be hard to convince IRS that this is anything other than a hobby that produces a small amount of income.
Also, the last time I checked, there were IRS rules that a home "business" must show a profit in 3 of the last 5 years. Starting out with a loss might make it hard to convince IRS that your work is anything other than a hobby that produces occasional income.
If you're unsuccessful in convincing IRS that yours is a legitimate "business", then you may not be able to show a loss until after you've had several years of showing net INCOME.
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