I know you asked for direct experience, which I do not have, but keep in mind that not all states may have the same laws regarding this. Just food for thought.
I know you asked for direct experience, which I do not have, but keep in mind that not all states may have the same laws regarding this. Just food for thought.
True, business can show a loss but not for too long, because it may draw attention to you (think IRS). My accountant said that 4-6 years after start up isn't out of the norm for a business to show little if any profit.
My business will be 100% legit, I have spoken with a few different accountants but have not settled on any one yet.
Thanks for the tips/advice
If you get a "good" accountant, he will be listing things out that you can and cannot do.
I suggest you make a list before you go visit one, so you get the most for your money. My accountant charged 95 bucks an hour for face to face consult, but he is one of the best in the county.
I don't know what business your are starting, but I would also suggest asking him about becoming an LLC, this separates your personal assets from business assets, think lawsuit. It also gives you some extra perks in regards to write offs.
There are literally hundreds of deductions that you can take legally, the more you can deduct, the less taxes you will have to pay in. Your taxes will be based on actual left over monies.
I would also suggest, when you get things rolling good, to purchase Quickbooks and use it religiously. It will let you know exactly where you stand, and when month end reports come around, and year end reports are needed, it's right at your fingertips.
Some things your accountant should tell you:
If you operate your business out of your home, part of the mortgage (if you have one) is deductible.
Part of your utilities is deductible, etc etc.
If you are traveling, and I mean anything related to business, keep track of mileage, the fed allows a pretty nice chunk of change for mileage.
Gas receipts, tolls, vehicle repairs and on and on.
Equipment repairs and purchases.
Depreciation on tools.
You get the idea, if they aren't focusing you on ALL of these things, find another accountant.
Frankie, can you explain more/better to me this neat scanner? Looking on google I see that it is a scanner, they also have cloud which I understand as another version of a back-up system and a neat desk ( according to thhis page http://www.neat.com/pricing/compare-best-scanner/There are a number of ways you can deal with your vehicles, fuel costs, business/personal mileage, maintenance, repair, etc.
One way is to buy mileage books for each vehicle, you can keep track of business vs. personal mileage. Business mileage is tax deductible. Presently the rate is 55.5¢ per mile.
Another way is to keep track all vehicle costs, including gas, and at the end of the year deduct the personal miles from your total miles, figure your percentage of business vs. personal miles, and deduct the like percentage ( of business mile) from your annual cost of operation per vehicle.
I use a "Neat" copier to scan my receipts. it allows me to not worry about losing the actual receipt, as I have a copy in both my quick books file, and my "Neat" file in my computer. I still keep the originals, but if I need to see a receipt, or if my accountant, or the government, or anyone needs to see a receipt for ANYTHING, I simply pull it up on the computer. The NEAT system also gives me a full breakdown of everything on the receipt, too. Material, labor, sales tax...
WHen you begin set up of Quick books, you can also set up various files, and accounts. For example, your shop, you'd need a "folder" for Utilities, rent or mortgage, equipment purchases, supplies, inventory, maintenance and repair, etc.
Any labor ( except your own) is deductible. Pay it with a company check. It is deducted from your gross profit at the end of the year, before income taxes are assessed.
It would have been easier, for you, to pay someone else to do it. As the business owner, you time, is not deductible. Once again, Any labor ( except your own) is deductible.
Hate to sound like a broken record but get a good accountant. I wouldn't make it a goal to show no income to make a decent living and do it by not paying taxes. Make a profit, pay yourself, and pay your share of taxes. The IRS can make it rough on you. tmm
Hate to sound like a broken record but get a good accountant. I wouldn't make it a goal to show no income to make a decent living and do it by not paying taxes. Make a profit, pay yourself, and pay your share of taxes. The IRS can make it rough on you. tmm
Not going to go out of my way to not pay what is owed to anyone, I am only going to try and take advantage of what I am able or allotted to me. Thats smart business