Owning a small business

[Johnny Rockets]

One more question. Since I have paid taxes this year and all small business expenses are deductible, it would make sense not to skimp on anything i need. like computer, phone, whatever setup costs.

Since I will basically get back every dollar i deduct up to the amount of federal tax...

Is that right?

Yeah I will get a tax accountant...

Like you said, get a tax account but that sounds right.

Might want to consider if some of those deductions would be more beneficial next year instead though.

[Happy Panther]

Yeah I'm just thinking of start up costs...meeting with a graphic designer tomorrow need to get a new printer etc. If it is all coming back to me I don't necessarily need to skimp

[charlotte49er]

One more question. Since I have paid taxes this year and all small business expenses are deductible, it would make sense not to skimp on anything i need. like computer, phone, whatever setup costs.

Since I will basically get back every dollar i deduct up to the amount of federal tax...

Is that right?

Yeah I will get a tax accountant...

First, I'm not an expert, but you can only deduct as much as you make. If your profit is $10,000, then you can't go negative, you can only show $10,000 worth of expenses. The Federal Gov only will stand you NOT making a profit for 4 years. (It MAY have been lowered to 3, not sure.) If you don't show a profit in 5, then they hit you with some pretty have taxes. (They figure if you haven't shown a profit in 5 years, that you shouldn't be in that business!) However, if you make a profit in your 5th year, then it resets to "0" and you can go back to breaking even for another 4 years!

But it's been almost 15 years since I was incorporated. (I'm sure things have changed, but not all that much.) Every President talks about tax reform, but very little ever changes for Corp taxes. I wish I could remember Ken's last name. He is a great business accountant, and if you take him out for dinner every so often, he gives you free tax advice. (That's what I did. LOL I'm talking about a resonable steak house, not Mortons.) I can even tell you where he lives/lived, but I don't remember his last name. (Oldtimers desease. LOL)

Make friends with a tax guy. DO NOT rely on ordinary tax people knowing business taxes. I made the mistake of going to my Fiancee's (Now ex-fiancee's) tax people and it took me 10 years to dig out of the corporate tax Hell! 30 minutes with Ken and he pointed out where they screwed up! By then, it was too late to fix.

I hope this helps. Brian

[Happy Panther]

Awesome.

Yeah so this year lets say i was working a regular job until July 31 and i paid 20k of federal tax. Aug 1 I am self employed and begin putting money into the new business.

Things start slowly so I don't expect any income until 2011. However it looks like I could spend up to 20k on new business expenses and I would get all of it back. Making a few assumptions here.

Now I am wondering if it will actually be a tax advantage to try to spend the 20k which i could easily do. Graphic design alone may be 4k

Will call up a tax accountant

[Happy Panther]

First, I'm not an expert, but you can only deduct as much as you make. If your profit is $10,000, then you can't go negative, you can only show $10,000 worth of expenses. The Federal Gov only will stand you NOT making a profit for 4 years. (It MAY have been lowered to 3, not sure.) If you don't show a profit in 5, then they hit you with some pretty have taxes. (They figure if you haven't shown a profit in 5 years, that you shouldn't be in that business!) However, if you make a profit in your 5th year, then it resets to "0" and you can go back to breaking even for another 4 years!

But it's been almost 15 years since I was incorporated. (I'm sure things have changed, but not all that much.) Every President talks about tax reform, but very little ever changes for Corp taxes. I wish I could remember Ken's last name. He is a great business accountant, and if you take him out for dinner every so often, he gives you free tax advice. (That's what I did. LOL I'm talking about a resonable steak house, not Mortons.) I can even tell you where he lives/lived, but I don't remember his last name. (Oldtimers desease. LOL)

Make friends with a tax guy. DO NOT rely on ordinary tax people knowing business taxes. I made the mistake of going to my Fiancee's (Now ex-fiancee's) tax people and it took me 10 years to dig out of the corporate tax Hell! 30 minutes with Ken and he pointed out where they screwed up! By then, it was too late to fix.

I hope this helps. Brian

Perfect thanks Brian

yeah next year I know I cant take in 10k of fees and have 20k of deductions and expect a 10k refund.

Thanks for your help