Hi...Over the summer I opened a small business so we had remodeling costs and new equipment costs. (photography studio) I just calculated my income vs. my expenses, and my expenses were about 7000 more than what I made. that makes sense to me, because my husband and I about broke ourselves trying to come up with the money to get this studio running. My question....is that going to raise red flags when I file, or will they take into account that I just opened the business and had a huge amount of expenses?
2007-02-21 04:33:22 · 3 answers · asked by larann78 2 in Business & Finance ➔ Small Business
the first year of business generally never sees a profit.....yes this is normal....you would not want to file with a loss for more than 3 consecutive years unless this was truly what happened....your equipment and such should be depreciated so when you see a loss on your return dont get discouraged because the numbers are "false"...that is, it looks worse than it is...good luck
2007-02-21 04:42:44 · answer #1 · answered by cookiesmom 7 · 0⤊ 0⤋
when you first open up a business your initial costs can be capitalized. and it is normal for a new business to have no profits the first year. and afterwards it should start going the opposite direction, with profits growing as time goes
2007-02-21 13:00:29 · answer #2 · answered by Danielle 3 · 0⤊ 0⤋
Most of your equipment should be depreciated over its useful life instead of expensed when purchased for tax purposes. Your best bet is to go to a CPA or tax accountant and let him/her guide you on the best way to proceed.
2007-02-21 12:39:08 · answer #3 · answered by Brian G 6 · 0⤊ 0⤋