Paying taxes when doing 2 different types of work.

Let’s say I do freelance work as a landscaper for a company and make regular money at it, with not many write-offs. But then let’s say I decide to start up a second, unrelated business as an interior designer, with lots of start-up costs and investments, and get a business license for that.

I decide to pay my taxes quarterly. I have $10,000 gross income for the quarter from the landscaper work, and only $1,000 gross from the interior design, because I’ve only had one job since starting the design business. However, I have $5000 in start-up costs from the interior design business.

Do I add up all of my income, deduct expenses and pay taxes on that, or do I pay taxes on the 10K, and then claim no net income on the interior design business?

You are not a tax accountant, I know. I’m waiting for mine to call back…

Are you a sole proprietor on the second business? I think that makes a difference.

I’m not sure what exactly sole proprietor means. My second business is an LLC and I am a member manager with no employees.

?

You’d probably fill out a Schedule C for each business, and deduct the expenses separately.

That’s what Hubby and I do, for our two different types of work (mowing vs. engineering). Each biz has its Schedule C; tractor parts, diesel fuel and lube are deducted under the mowing biz; computer supplies, paper, drafting supplies are deducted under the engineering biz.

Instructions for Schedule C.

So I guess that even though it would seem really awesome to deduct the $5K write-offs from the grand total of all of my income, and then pay taxes on that, I guess I couldn’t really do that?

I would have to pay taxes on the full 10K (very few write-offs) for the first biz, then I would pay no taxes on the $1K for the 2nd biz because I had $5K start-up expenses, and basically the other $4K of write-offs for the 2nd biz would be a loss at the end of 2007 if I hypothetically never made another dollar this year on the 2nd biz?

( I really am waiting for the phone to ring!) :stuck_out_tongue:

Ah, so it is a corporation. I know little of corporations. Sole proprietor is just You, with no corporate barrier between business and personal affairs.

Yes, this whole subject is way bigger than my humble understanding of it. I think I’ll just let this rest until I’m face-to-face with my tax person, who will undoubtedly have a dead, glazed look in his eye from drawing countless diagrams for me with stick figures.

:stuck_out_tongue:

Mods, you can put this one to bed.

An LLC is a hybrid between co’s and sole proprietorships. (Limited liability company)

For tax purposes, they are considered sole proprietorships, not co’s.

To answer your question, I think that you would still have a net income of 6,000.

But I have my own accountant. So that was just a wild ass guess. Eey yah.