Federal Tax Question- New small business - Please help! = )?

Question

This past year I decided I wanted to start a business (photography). I've only purchased a few things and haven't made any money yet. Can I claim what I purchased as a deduction? Do you have to have a Tax Id number before you can do this? Do I have to file a seperate form (from my standard tax form)? - Thanks for the help!!!

Answer 1

You can deduct your expenses against Photography income but there is a limit to what you can deduct from that business against Ordinary Income. You might also be able to carryforward some of the loss to future tax years.

This is basically self employment income you don't need a seperate tax ID number but you'll have to at least file the full 1040 form (not 1040EZ or 1040A) and you'll need schedule C for Profit and Loss from a Business.

Find a CPA that specializes in taxes. Stay away from HR Block type places.

Answer 2

You may file a Schedule C with no income that reflects a loss. There is no limit on your losses. However, the IRS will expect that you start to show a profit eventually. Make sure you document all your expenses.

Keep in mind that if you have items that you use both for personal and business, like a computer, printer, etc. they have to be used at least 50% for business purposes in order to be deductible.

Keep track of your mileage used for business purposes in a journal.

Answer 3

What ever you purchased for the business is a deduction, you dont have to get a tax id, but if you are gonna have empleyees you must, and if you charge sales tax, you need a SALES TAX NUMBER, tahts different than the EIN (tax ID) (EIN=Employer Identification Number), and the form for this is a different schedule form from thr IRS, i recomed you a CPA for that. But Again, I recomend you to incorporate youself, save tax money, and separete your business from whats personal, more write off money for taxes, etc. go to this link.... http://www.corporate.com take a look there and youll see what i'm talking about.

Answer 4

Man, are you in for a shock! sorry,....

but if you are planning to claim a DBA, doing business as.... the write offs are nothing compared to the tax burden you will bring upon yourself.

First of all, your Social Security number is your tax number, unless you register a DBA title witht the city. Then you would get a TAX ID that is associated to your SS number if you are a sole propritor.

So anyway, either way, you will have to pay double social security tax, ontop of your personal tax. In addition, every quarter you will have to pay estimated taxes. The IRS will religously send you a voucher kit for you to do this.

And you will have to itemize your taxes and file a schdule D (think its D), because you have a business....

So the idea here is that don't try to save a few bucks by trying to claim writeoffs.. its not worth it,,,,

Don't get into this untill you are sure you are seriuos about this...

I got out, cause the quarterly, estimated taxes were too much.. ontop of having to double my social secuirty taxes.... forget it!

Answer 5

if i remember right you can do everything together. schedule c for business. better to get a tax guy to do it.. but also you can deduct full price the things you bought to start the business (think up to 10,000 or was it 100,00.00) without deprecating but that's for only the first year start up. that was from turbo tax couple years back. your tax id is your social

Answer 6

for any clarifications regarding the tax filing refer the websites. here is one of the site address which can help u in this. go through it