Can I write off time I spent working on my business?
To expand a little on what littleadv said, you can only deduct what something cost you. Even if you had done volunteer work for a charity as a sole prop you could only deduct your actual costs. If you paid an employee to do charity work or to learn something related to the business that would be deductible as a normal business expense.  Some common sense would show that if you could deduct something that didn't cost you anything (your time) you could deduct away all of your income and avoid paying taxes altogether. Back to your more nuanced question could 2 businesses you own bill each other for services? Yes, but you will still have to pay taxes for money earned under each of them. You will also need to be careful that the IRS does not construe the transactions as being done solely to lower your tax bill. No, you cannot write off time, period. You should price the time spent into your product. I, occasionally, work on side projects of my own and forgo the   possibility of earning direct income for that time. Income not earned is income not taxed, so there's nothing to deduct.
"I'm in my 40's, and fully paid off the mortgage early.  My ex would have preferred that I'd given it to her as spending money instead.  It can be said that since interest rates after year 2000 went down not up, I am a mug to have paid off early when perhaps I could have just bought more stuff like everyone else does.  I looked at the 1970 to 1990 average interest rate; about 10%, and thought that it would be imprudent to have a big debt which would be crippling at 10 or 15% interest rates, so I paid it off while I could. A factor to consider is how you expect your own income to change over the next decade.  If you work in shops, call centres, taxi driving, import warehousing, language translation, news writing, or anything which can be offshored or automated, then either the expectation of your salary diminishes towards the worldwide typical, or if it goes below £7.50 per hour typical then your employer goes bust.  Or blags a subsidy.  That is, I am a pessimist and would pay off early while possible.  I don't know chinese for ""he's not here"" to say to the debt collector." I would question whether your stated goal (of strictly controlling your expenses) is really the problem you should be tackling.  In my opinion, unless you're under financial hardship where you can barely make ends meet, you're much better off using a budget as a high-level, descriptive tool rather than a low-level, prescriptive tool. This is what I would do in your situation: After the first few months, you can start to think about high-level changes that you can make to your spending habits to get the most bang for your buck.  I wouldn't worry about the little expenses, unless they're really adding up to a sizable chunk of your total expenses.  Instead, I would look at things like: eating out too often, buying too many movies, too many impulse buys over $100, etc. Identifying patterns like that will help you make lifestyle changes that will allow you to spend less money without having to micromanage every single expense.  I have tried the micromanaged approach in the past, and it simply doesn't work for me.  There's too much overhead, and eventually I start to feel that it's just not worth it.  Think about it - is it really worth the extra time and energy required to worry about where every dollar goes all month long just to save an additional hundred bucks over what you can do with this passive approach?   I think that by focusing on the big picture, you can get within a couple percentage points of the same amount of savings as if you had micro-managed your expenses, but with much less work and mental strain. Let's put some numbers on this and see what the hourly returns are with each approach, always being optimistic about the micromanaged approach and conservative on the passive approach.   Let's assume you earn $50,000/year.  Let's also assume that if you micromanage all of your expenses, you could manage to save $5000/year beyond what you do now.  And let's say that with the passive approach, you can get within 20 percentage points instead of the 2 I stated earlier, for a savings of $4000/year.  Now what will your hourly returns look like?  The following are based on how I would personally use both systems, so your numbers may vary a bit. Micromanaged Budgeting Savings = $5000 per year = $416.67 per month  Time spent = 15-30 minutes per day = 7.5 - 15 hours per month  Hourly return = $27.78 - $55.56  Passive Budgeting Savings = $4000 per year = $333.33 per month  Time spent = 1 - 2 hours per month Hourly return = $166.67 - $333.33 So clearly the passive approach gives a substantially higher hourly return, even though it gives a lower absolute return.  Maybe more importantly though, if passive budgeting opens up an extra 10 hours a month, you could potentially put those hours into your job and make an extra (10 hours * $25/hour) = $250 a month, or $3000 per year, assuming no extra pay for overtime.  So that means that the passive budgeting approach would actually allow you to save ($4000 + $3000 * .75) = $6250 per year, compared to the $5000 you would save by micromanaging. If you're in a situation where you can't put those hours into more work and you really need that extra $83.34 per month to help make ends meet, then by all means micromanage your expenses and try to save as much as possible.  But if either of the previous conditions are not true for you, you're much better off, in my opinion, using a passive budget. "Your corporation would file a corporate income tax return on an annual basis. One single month of no revenue doesn't mean much in that annual scheme of things. Total annual revenue and total annual expenses are what impact the results. In other words, yes, your corporation can book revenues in (say) 11 of 12 months of the year but still incur expenses in all months. Many seasonal businesses operate this way and it is perfectly normal. You could even just have, say, one super-awesome month and spend money the rest of the year. Heck, you could even have zero revenue but still incur expenses—startups often work like that at first. (You'd need investment funding, personal credit, a loan, or retained earnings from earlier profitable periods to do that, of course.) As long as your corporation has a reasonable expectation of a profit and the expenses your corporation incurs are valid business expenses, then yes, you ought to be able to deduct those expenses from your revenue when figuring taxes owed, regardless of whether the expenses were incurred at the same approximate time as revenue was booked—as long as the expense wasn't the acquisition of a depreciable asset. Some things your company would buy—such as the computer in your example—would not be fully deductible in the year the expense is incurred. Depreciable property expenses are deducted over time according to a schedule for the kind of property. The amount of depreciation expense you can claim for such property each year is known as Capital Cost Allowance. A qualified professional accountant can help you understand this. One last thing: You wrote ""write off"". That is not the same as ""deduct"". However, you are forgiven, because many people say ""write off"" when they actually mean ""deduct"" (for tax purposes). ""Write off"", rather, is a different accounting term, meaning where you mark down the value of an asset (e.g. a bad loan that will never be repaid) to zero; in effect, you are recognizing it is now a worthless asset. There can be a tax benefit to a write-off, but what you are asking about are clearly expense deductions and not write-offs. They are not the same thing, and the next time you hear somebody using ""write off"" when they mean ""deduction"", please correct them." "I'm sceptical of your position.   I reckon that people who put crazy long hours into a business that fails are lacking some intangible qualities of entrepreneurship.  There are people you can just tell, they don't have what it takes. They're putting in loads of commitment or loads of money into an idea that just isn't right. Or they spend money in the wrong ways - you know how all these internet companies spent money on champagne breakfasts and $1000 chairs during the dot-com bubble? I've seen the small-scale version of that, as people rent expensive offices when I'm thinking ""why aren't you just working from home?""   As a (small time) entrepreneur I'm obviously biased, but if you've got what it takes (so I think there is an element of ""predestination"" here) and you work hard then you *will* succeed, to some greater or lesser extent.  I mean, I know electricians and builders that have started their own contracting or supplies businesses - they're not rich by the standard of mutli-multimillionaires, but they have a bloody nice house and a bloody nice car in the driveway and they probably take an afternoon a week off to play golf. They're doing better than most of the other guys they worked with as electricians or builders 20 years ago, and I don't see that they're really doing anything too clever or sophisticated.   Also, the classic figure of 9/10 businesses failed - ""failed"" here is a very dramatic word, implying that the entrepreneur lost his or her shirt. Often it's not a case that the business lost them money - they pissed away thousands on rent or wages or misplaced marketing - but more that it made a bit of money, but not enough, so they moved on to something else. That something else might be regular employment for some people, but there are *plenty* of entrepreneurs - perhaps some of the greatest and most famous ones - who have gone on from one failure to a much bigger success." You need to set your status as self-employed the day you started online work. If that date is a little ambiguous (as is usually the case with online business), you can start with the day you first made any money. Yes, you can deduct expenses from your revenue. But you have to be sure that the expenses were purely business related.  This is how it goes: You inform HMRC about the day you started work. HMRC will assign you a UTR (Unique Tax Reference) number. Depending on how much you make you might or might not need to pay Class 2 NI contributions. You'll need to tell HMRC how much you expect to earn in the current tax year. Finally, you'll need to complete a Self-Assessment at the end of the tax year. I highly recommend setting up a business banking account. Here is a link that discusses being part-time self-employed in the UK. If it's a legitimate cost of doing business, it's as deductible as any other cost of doing business. (Reminder: be careful about the distinctions between employee and contractor; the IRS gets annoyed if you don't handle this correctly.) "Yes, your business needs to be in the business of making money in order for you to deduct the expenses associated with it. I suppose in theory this could mean that if you take in $10,000 and spend $30,000 every year, you not only don't get a net deduction of $20,000 (your loss) but you have to pay tax on $10,000 (your revenue). However this is super fixable. Just only deduct $9500 of your expenses. Tada! Small profit.For all the gory details, including how they consider whether you have an expectation of profits, see http://www.cra-arc.gc.ca/E/pub/gl/p-176r/p-176r-e.html This ""expectation of profit"" rule appears to apply to things like ""I sell home décor items (or home decorating advice) and therefore need to take several multi week trips to exotic vacation destinations every year and deduct them as business expenses."" If you're doing woodworking or knitting in your home and selling on Etsy you don't particularly have any expenses. It's hard to imagine a scenario where you consistently sell for less than the cost of materials and then end up dinged on paying tax on revenue." I'm no tax expert by any means. I do know that a disreagarded entity is considered a sole proprietor for federal tax purposes. My understanding is that this means your personal tax year and your business tax year must be one and the same. Nevertheless, it is technically possible to have a non-calendar fiscal year as an individual. This is so rare that I'm unable to find a an IRS reference to this. The best reference I could find was this article written by two CPAs. If you really want to persue this, you basically need to talk with an accountant, since this is complicated, and required keeping propper accounting records for your personal life, in addition to your business. A ledger creqated after-the-fact by an accountant has been ruled insufficent. You really need to live by the fiscal year you choose.