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?
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
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.
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
|
