If you love dogs, why not start a dog grooming business or any business for that matter. Starting a small business is a great way to possibly reduce taxable income. Statistically, most businesses do not turn a profit for several years. As such, your taxable income can be reduced by the amount you are in the red if the total investment is at risk. You do want to make a profit eventually as your business grows. Paying taxes on any profit you make will be no sweat off your back because you will be making money hand over fist. Right!?
From IRS.gov: To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
It is important to separate business expenses from the following expenses:
- The expenses used to figure the cost of goods sold,
- Capital Expenses, and
- Personal Expenses.
By starting a business, you will also become a member of the small business community and hopefully be able to foster economic growth and create jobs. So, what are you waiting for? If you love dogs, groom. If you love food, cook. If you love fashion, design. Whatever your passion, take what you love and make money doing it.
Nicole Davis, CPA
Butler-Davis Tax & Accounting www.bd-accounting.com 770-500-5341