Home Based Business Start Up
Hi there. I've not yet made a profit (still a few weeks left!!) as a consultant, however, I've spent or invested in my home-based business by investing in education. What do I need to show and do when filing taxes for 2023? At current, the business model is a "sole proprietorship". Thank you
Best Answers
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You haven't specified, but have you made any income during 2023 from your business? (Profit typically means income less expenses > $0.)
If your home-based business is new in 2023, the IRS states, "When starting a business, owners should treat all eligible costs incurred before beginning to operate the business as capital expenditures that are part of their basis in the business. Generally, the business can recover costs for assets through depreciation deductions."
"Start-up costs include amounts paid or incurred… to produce income in anticipation of the activity becoming an active trade or business." Startup costs are typically amortized, but the IRS does allow up to $5000 in startup costs to be expensed without needing to amortize it over several years.
The IRS does not require your business to have a profit. If you have expenses you will want to file a Schedule C to claim your business expenses.
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read this again…
If your home-based business is new in 2023, the IRS states, "When starting a business, owners should treat all eligible costs incurred before beginning to operate the business as capital expenditures that are part of their basis in the business. Generally, the business can recover costs for assets through depreciation deductions."
Answers
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Thank you so much "KeriC"! I have not made any income with my business. I will file a Schedule C as you've informed me. I appreciate your reply. This was such a great event!
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"Kaybee"!! Thank you. I appreciate your depth of thought, and for emphasizing what should be re-read & understood.
Sincere regards.