I added a 2nd business in 2022, expenses all year, but my dba wasn't formed until October. Can I add this business to TurboTax along with my current sched c filing?

Forum|Forum|3 years ago
February 5, 2023
2 replies
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I had no income from this business, and paid everything out of my pocket.
1st, need to know it's OK to add business having expenses but no income, and 2nd, if it's OK that I've run the business all year but didn't get my dba until October.
Ty!
T

TurboTax Online

Mike9241

was the business open for customersin 2022? if not all those preopening expenses are start-up costs under 195 and not deductible until 2023. dba is irrelevant for federal income tax purposes.

tsolderAuthor

What confuses me is the fact that this 'business' serves feral cats as my customers. Everything I have spent so far, all thruout 2022, has been for food and meds for them. I guess my business has had doors open all of 2022. I expect during 2023 I'll receive money from people willing to help pay the expenses, and this would be my business income.

Does this comply with the irs definition of a business? My previous questions still apply.

Ty t

AliciaP1

No, this does not qualify as a business. Even if you take money from other people to offset your expenses, you are not operating with the intent to earn a profit.

See Am I considered self-employed? for specifics.

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JohnB5677

Yes, it is possible to start a business that did not make any money in the first year. However, when did you "Open your doors for business". This is the actual date that the business started.

As far as the out-of-pocket expenses go, they may actually be "Startup costs". "When starting a business, owners should treat all eligible costs incurred before beginning to operate the business as capital expenditures that are part of their basis in the business. Generally, the business can recover costs for assets through depreciation deductions. For costs paid or incurred after September 8, 2008, the business can deduct a limited amount of start-up and organizational costs."

Here’s how businesses can deduct startup costs from their federal taxes

When you say DBA, I think you're referring to your Tax Identification Number (TIN).

"If your business claims a net loss for too many years, or fails to meet other requirements, the IRS may classify it as a hobby, which would prevent you from claiming a loss related to the business. If the IRS classifies your business as a hobby, you'll have to prove that you had a valid profit motive if you want to claim those deductions." When the IRS Classifies Your Business as a Hobby

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tsolderAuthor

Some clarification here... I have been providing food and medication for a community of feral cats living in my yard and in my house, since before 2022. My actual expenditures for same have been about 1000.00/month. I received an official, fictitious name, aka dba, from state of fla, which enabled me to open a business bank account for this business, in October 2022. My hope was to receive donations into this account and pay all bills from this account, but so far, all expenses have been paid from my personal checking account, and have not yet received any income. In my 1st business, sole prop, sched c, I posted my gross income, and my expenses were subtracted from that, for net profit.

I'm hoping I can add the 2nd business using same TurboTax filing, showing no income, but show all expenses for care of the kitties.

Will this work to lower my total tax burden?

Ty, t