I started my own photography business. I got the permit and lic ense and all. Unfortunatley i work full time and OT, have a part time job and go to school. This leaves me no time to actively engage in the business right now. Yet, i still spend money on photo supplies etc. which i plan on writing off on my taxes the way I did last year. I have made only about 200$ in revenue. (I know how pathetic that sounds, but again, I haven't tried) Can I get in trouble with the IRS?
2006-09-30 16:45:54 · 4 answers · asked by CyndiLauperfan 2 in Business & Finance ➔ Small Business
Generally speaking in order for it to be considered a business instead of a hobby you need to show a profit 1 out of 3 years. If not you run the risk o the IRS determining it to be only a hobby and disallowing any deductions you have taken thus putting you on the hook for back taxes, penalties and interest.
2006-09-30 16:48:59 · answer #1 · answered by spc_rice 2 · 1⤊ 0⤋
If you tried to make money with this business venture then you are fine by the IRS. If the reason you are still spending money on photo supplies (and you take these expences for your business) and these expences have nothing to do with your business, then my friend, you are a tax cheat and will be punished! Actually, if the total income you report for the year for everything is under $100,000 you stand a very small chance of being audited so go for if girlfriend!
2006-10-01 00:56:57 · answer #2 · answered by Kathy R 2 · 0⤊ 0⤋
As long as your paperwork is in order, you should be OK. If you use any of your supplies for personal use, you must show it on paper for your business, or you will have troubles, mostly from lenders and tax collectors as unreported income or theft. I know it's yours and is part of owner's equity, but you have to keep the paperwork straight for future accounting. Why don't you run an ad in some of the free papers? They're cheap, and you could write off a portion of the cost of an answering machine and phone.
2006-09-30 23:55:28 · answer #3 · answered by jelesais2000 7 · 0⤊ 0⤋
Probably not....they have much bigger fish to fry.
2006-09-30 23:48:29 · answer #4 · answered by opjames 4 · 0⤊ 0⤋