Are you a business?
Are you Legal?
For many years, I had a legal business in our state for my art and photography business. I wrote it off, paid all the state fees, the city permit, collected sales tax and paid it online, wrote off expenses and all that. My buiness never made a profit, then for two years the CPA's who did our taxes said I needed to be making a profit. That last year, I almost made a profit, but the CPA's told me I needed to get rid of my business and just be a hobby. So I closed out my Single Entity LLC and did all that. That was over a year ago.
This year I didn't try to deduct anything or claim income (it wasn't significant anyways). But I'm hoping this year will be different and I will have to claim income when we do our 2018 year taxes.
I was wondering what most of you are doing? Are you a hobby or a business? If you are a hobby, are you writing off any expenses - like the WA fees, any other training, your computer, your office, etc.
I always want to be legal, but I did what the accountants told me to do and now I may have to restart my business. At least I hope I have to because I hope I earn so much I MUST do that.
What are your thoughts?
-shirley
Recent Comments
9
With the new tax laws this year, we didn't get to itemize, so I'm wondering if we will have to pay in this year. - Shirley
Hi Shirley, I incurred a ot of business expenses which I was hoping to write off against tax, but that´s not possible in Slovenia:-(. So, I need to re-consider my tax strategy, as maybe one day i will make a profit:-) Best Alan
The IRS presumes the activity is to be profitable for 3 years of a consecutive 5 year period. BUT... there are other factors considered. The Audit Technique Guide (IRC § 183: Activities Not Engaged in For Profit) are the guidelines used to help agents determine whether an activity is for profit or a hobby.
Many startup companies have years worth of losses. But you don't see CPAs telling them to stop. FedEx, Tesla Motors, ESPN, Amazon, and Turner Broadcasting System are five of many companies that made no money their first 5 years.
I’m in the U.K and the tax year ends tomorrow so I have to file my accounts but am a sole proprietor so it’s fairly simple and yes everything goes into expenses.
With Grace and Gratitude
Karen
We haven't used a software package like TurboTax because of the way my husband, a financial advisor, got paid, the way we invested and the way we donate to Wycliffe (with stocks) - we have used a CPA firm for years. And when I set up my business we went through a lawyer. We may eventually get away from the CPA firm, but probably not for a few years.
I’ve been using Turbo Tax Home and Business for years and write off EVERYTHING used to run my online business. It walks you through everything and it’s great. They even offer Audit Defence in case you get audited by the IRS. If you have any questions you can PM me. Thanks, Curtis
So far à hobby.