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…
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.
[QUOTE=NinetyWt]
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.
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?
[QUOTE=xanthous]
I’m not sure what exactly sole proprietor means. My second business is an LLC and I am a member manager with no employees.
?
[/QUOTE]
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.
[QUOTE=Sunspace]
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.
[/QUOTE]
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.
