Question by Hoping he will bless me with #1: Can anybody explain to me, in plain and simple words, how writing off business expenses work?
I have searched other questions on here and come up with one Best Answer that directed me to the IRS website, but I am still unclear. I have a home-based Administrative, Secretarial and Computer Training business that I work on part-time, in addition to my full-time job. I applied for the Tax ID Number about 3 years ago, but haven’t done anything with the business until three or four months ago. I now have one client, who has paid me a total of $ 170 so far this year. I have four business accounts and have purchased some minor office supplies (stapler, paper, camera, paperclips, pens, etc.). I also purchased a new desktop computer with my business account. I have a room setup as an office in my home.
If don’t think I’ll make over $ 400 this year because I am still trying to figure out ways to advertise. If I don’t make a profit, do I have to pay taxes? I saw something about the IRS wanting you to make a profit within 3-5 years, but what if I don’t?
I really don’t plan on purchasing any other major office supplies until I get some more business. I recently got a tax form from the IRS saying I needed to file taxes, but on what? I made no income from the business, except in 2007 which is the $ 100 something dollars I mentioned earlier.
I understand that I can write off anything that is related and necessary for my business. I also understand that I should keep track of everything (gas mileage, etc.). Say for instance, if I have a business gas card and I use $ 100 for personal gas and $ 100 for business gas, do I just deduct the business gas?
What if I spend more money trying to advertise and get the business up and running, than I make? Let’s say I spend $ 2,000 in 2008 but I only make $ 500. Does that mean I have a loss of $ 1,500? I really can’t afford an Accountant so I am trying to figure this out on my own. I think I can get it if somebody can explain it to where I can understand it.
Any help that you can provide!
Answer by Ask M
Well if you don’t want to ask the IRS, then consult with
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