New small business

Forum|Forum|1 year ago
May 22, 2024
1 reply
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I just started a small side art business 2 years ago. I’ve sold items but am not making a profit yet. I have quite a few equipment expenses, some materials expenses, and also I’m taking a few classes to further my craft. Questions I have are:

1) What does the IRS consider a reasonable amount of time to claim losses before starting to make a profit?

2) things like laptop, phone, and iPad - can I claim the whole expense in one year or spread it out over time? If so, how do I determine the amount of time to amortize?

thanks

Ask the Experts - Biz Tax - May 2024

Anonymous

The IRS allows you to claim losses for three out of five years. You do not have to show a large profit but a profit.

If too many years go by without showing a profit the IRS may classify your business as a hobby making it ineligible for tax deductions.

If you are already operating at a loss you may want to spread the cost of your laptop phone and IPad over time so when you are making a profit it will be benificial. Computers depreciate over a five year period along with the Ipad. Your cell phone depend on how much is business use.

Depreciation of Business Assets

Can Cellphone Expenses Be Tax Deductible with a Business?

Thank you