How do I know which edition to use? Bought a business in October - only have expenses but not operational/income generating yet.

It depends.  Are you officially open for business and if so, did you advertise that you were open to the public?  If you can answer 'yes' to these questions then you are self employed on that date.  If that date fell in the tax year 2021 you should file your return as self employed with a Schedule C.  

If you answer 'no' to those questions then you are not officially open and operating and should wait until 2022.  The IRS does understand that at the initial start of a business it may not be profitable in the first few years depending on facts and circumstances.

TurboTax Self-Employed online will lead you through the self-employment activities.  You need to prepare one Schedule C for the cleaning services and a second Schedule C for the lawn business since they are two separate and distinct businesses.

The documents you will need to complete these schedules are:

1. Total income for the year 
2. The cost of all supplies purchased to be able to perform your services for your clients
3. Any equipment that was placed in service and has more than a one year estimated life such as a lawn mower must be listed individually with the date of purchase and the cost including any sales tax paid.  The will be listed under assets and each asset must be entered by itself in this section.
   • If you have assets that cost less than $2,500, it's just easier and faster to enter their total cost under the miscellaneous costs. This is a special rule. The de minimis safe harbor is simply an administrative convenience that generally allows you to elect to deduct small-dollar expenditures for the acquisition or production of property that otherwise must be capitalized under the general rules.
4. Start up costs - if you had any expenses before you actually opened for business services such as legal fees, market study or organization fees
   • The IRS allows you to deduct $5,000 in business startup costs and $5,000 in organizational costs, but only if your total startup costs are $50,000 or less
5. If you store any supplies at your home and you do not have a separate business location you may be able to take a home office deduction.
6. Cell phone expense if applicable
   • Where do I enter Schedule C (either to start or to review or change)
   • Do I qualify for the home office deduction?

If you would like to use TurboTax Live your can review the video to show you how it works. Click here for the specific information about TurboTax Live for self-employed.  Once you are signed into your TurboTax account you can click the Live Tax Advice button on the top right. 

Lastly it's important to distinguish between business or hobby. Any income received for services or goods is taxable.  You have to decide if it's a hobby or a business for tax purposes. Review this page from IRS:

• Business or Hobby?

Key elements:

1. A hobby requires you to report the income you received and under the current tax law, Tax Cuts and Jobs Act (TCJA), no expenses are allowed to be used to reduce the money collected even if you itemize deductions.
2. A business allows you to deduct the costs necessary to obtain the income.  The law explains that 'you must be engaged in the activity to produce a profit'.  The test under IRS is that you must show a profit three out of every five consecutive year.