Also, what does the law say about things purchased for business use, but used occasionally for personal use? What if I was a coin dealer, and spent $300 on a stereo microscope to look at coins, but took it home with me one day to look at some of my own?
My accountant told me...that businesses purchases need to be for items primarily used for the business. That said, I use my personal cell phone a lot to make business calls (as not to free up the office phone). Because a fair portion of calls I make with my cell are business related...I can write off at least a portion of the cell phone bill (I haven't been for more complicated reasons...but I could and it would be legal). I also use various items at my business for personal needs. For example, I have a small postage scale at the office...I do at times weigh personal mail to see how much postage it needs with it. That is perfectly legal. The IRS isn't going to stand over your shoulder and make sure these items are being used for business purposes 100% of the time. But, they need to be reasonable purchases for your business. My accountant tells me to ask myself when making a purchase for the business..."is this reasonable and necessary for the business?" If so, then its OK to buy it. If it's not, the answer is no.
BTW, what is a tax write off? Is there something special to do, or is it simply adding something on "Expenses" om the Schedule C Profit or Loss from Business (part of 1040). Also, what happens if your expenses are greater than your income?
If your expenses are greater than you income... you're going out of business Get Quickbooks , or a similar program, and learn how to use it. Makes tax time much easier. Write everything down and keep it. Have a separate business account and keep it that way. I use my business debit card for every purchase. Make accounting much easier. Don't forget to send in your estimated taxes during the year. Just a few tips.
Perhaps you should start with the SBA (link below) as they can offer both valuable local guidance and programs that can be of use even if/when the time comes that you're no longer interested in this idea. Also, and with all things considered, don't bother with the loan section; at this point it would be an exercise in futility. http://www.sba.gov/ You may also want to check out this site. http://www.wiusbdc.org/ The point is that you need to stop dreaming, worrying about using your "business" to buy personal collectible coins, or about write offs before you've even covered the basics or have written a business plan. Speaking of which, here you go: http://www.sba.gov/category/navigat...ess/starting-business/how-write-business-plan If I were you, I would very much appreciate that the good people on this forum are, after all the nonsense, still trying to help you. It would be much easier to simply dismiss this as another daydream, so please... if you're serious about this, show these people that their efforts are not again wasted or in vain. Good luck.
I am serious about this. I realized the company I tried to start before was entirely too much of a financial undertaking, and it's hard to get lent money after the recession. Also, if I was lent money, and lost money, then I would be screwed. This is why I'm taking the "baby steps" approach. I'm starting out very small, so if I loose, it won't be such a loss.
In business, you can having very slow moving inventory. It is part of normal business. You just need to keep it on the inventory list. Does this help?
And that is taxable income and you better make sure you're making quarterly estimated tax payments to the IRS on, or you're really screwed.
With numismatics, like stocks, you can have a huge gross income but low net profits, with stocks there is SS# tracking so the IRS is looking for a return corresponding to the stock transactions, but they may not be getting corresponding transaction reports on auction sales, straight sales to a company, etc.. Apmex is the only numismatic company that has ever asked for my ss#. The question is with the terrible consequences of cheating is will those who need quality accountant and other help know how to get it? I have employed good ones and totally unscrupulous ones and those birds wreak havoc with the psychology of those they cheat for. Better to be honest but work in all your deductions as it's not like the federal budgets are getting balanced anytime soon, the states however have to balance their budgets.
Sometimes there is useful information for other folks on this site. I'm developing a new business myself as mentioned earlier and the responses have confirmed that my thought processes and plan are at least inline and on the right track. Sometimes Tims threads answer other folks questions who ordinarily wouldn't ask. I'm a great example this morning. My new business is real estate related, but it's the process of building the business itself and learning how to separate things and get it to function as a responsible entity that I was looking for assurances that I was on the right path. However with my business being real estate and not coin related I would have never thought to ask for advice here, Timmy did it for me though by opening a similar dialogue and now I've had some extra light shown on my situation. All is not lost Books. Imagine for a second if Tim is in a large, dark space or area. You enter with a light to directly try and help Tim and show him the way, never realizing there is another lost person in the dark whom you just helped by exposing your light for Tim. You simultaneously gave the other person direction to the source of help, and that's what has happened here. By trying to help Tim along, you all have greatly helped me out as well. Thanks guys for always trying to do the right thing even in the face of frustration.
There are a lot of scams like this preying on people's fear of the tax agencies: http://www.stamfordadvocate.com/pol...olice-issue-IRS-flim-flam-warning-5215369.php
Tim - if you want to pursue this idea you need to spend some time talking to a good accountant and asking him/her all your questions. As it stands now you seem to think or believe some things that just aren't true - things like that will get you into trouble. You said you want to take baby steps, that's a good idea. So for the time being, don't do anything until you spend some time talking to an accountant so you can find out what the laws and regulations actually are - as opposed to what you think they are.
A write off is basically a tax allocation of your expenses. Basically, money spent on your business isn't taxed. For example, if you spend $300 on a microscope for your business...that $300 isn't part of your taxable income. Certain kinds of businesses can write off all expenses and negative equity...some kinds can't. If you have greater expenses than income your business (usually) is in trouble. Now, most businesses need start up money (working capitol) to get going and many businesses lose money at first. You will need to invest personal working capitol into your business to keep it afloat until it begins to support itself. Remember, you are talking about a retail business...and most retail businesses have a very narrow profit margin. So, it's critical to minimize your expenses and be very smart about what you do with your money. Like GD said, find a good accountant and talk to them about this if you are serious. They are the real experts in this field. Problem is, accountants aren't cheap...especially good ones.
This thread is getting redundant. Many of us have already told him since page one of this thread to seek tax advice from an accountant. Not sure why people are giving any other advice other than perhaps referring him to published resources. Seeking small business and tax advice from people on an anonymous online coin blog is crazy. Even if he cannot afford the professional advice, he could always have looked up the SBA or IRS links others have graciously offered to him. Why did he not do this before posting for help? Many times things do not come easy, especially in starting a new business, and you need to actually apply yourself and educate yourself first. I believe that the OP is serious about this venture but given the fact that he does not have a business plan yet, perhaps we should allow him some time to do the research on his own and think this through some more. I support small business all the time, and if this works out for him, I assure you that I will make a purchase.
I think the answer to this is quite simple. Not to be rude in anyway about Tim, but I believe Tim to be a "dreamer." He thinks up ideas that sound really good to him at first and he dives in head first without really thinking them through fully. He gets started, gets lost, and has no idea where to turn...so he turns here. I honestly believe his intentions to be good...but he lacks the background knowledge, finances and skills to follow through. Eventually, he finds a different interest or idea and moves on to start the cycle again. I truly believe he is a good guy with good intentions, and I in no way mean this to be disrespectful.
Hmm. Good advice about keeping "you" and "the business" separate. Now, let's say a certain John Q. Citizen gets his business going. I mean REALLY going. It gets really big annual sales in the 'millions' of dollars. The business goes public, getting traded on the stock market. The business, and owner, get wealthy from its high, investment-grade, stock prices (don't ask me how this happens, okay? I, too, am entertaining my own little fantasy here). But then he gets into debt, big debt, trying to expand (a huge investment in vending machines placed in bars and nightclubs that dispense Intercept Shield products is a big flop). He's in trouble: Even if he sells off assets, he won't be able to recoup, by any (uh, legal) means. How to keep the debt from hurting his stock price? Well, what's stopping him from establishing numerous "Limited Liability Special Purpose Entities" that could allow him to transfer liability so that it would not appear in "the business' " accounts, allowing his business to maintain a robust and generally increasing stock price and thus keeping its critical investment-grade credit ratings? "Cookin' the books" a LITTLE ain't all that bad, is it? Legal?
I applaud your efforts in starting a small business, Tim. But, this thread, to say the least, is probably more confusing than helpful in finding the answers you are looking for. Every business, whether in a garage or on the 50th floor of a Park Ave building, starts out by first defining it's tax obligations..before anything else happens. I suggest you take many people's advise here and hire an accountant. Its a lot cheaper than getting audited, or thrown in jail for tax fraud or evasion. It's really very simple and will save you headaches down the road.
