Can I write off (deduct) expenses in a period where my corporation makes no money?
"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."
In the US there's no significant difference between what a business can deduct and what an individual can deduct. However, you can only deduct what is an expense to produce income. Businesses are allowed to write off salaries, but individuals can't   write off what they pay their gardener or maid (at least in the US) If you're a sole proprietor in the business of managing properties - you can definitely deduct payments to gardeners or maids. Business paying for a gardener on a private property not related to producing the income (like CEO's daughter's house) cannot deduct that expense for tax purposes (although it is still recorded in the business accounting books as an expense - with no tax benefit). Businesses are allowed to deduct utility expenses as overhead, individuals cannot Same thing exactly. I can deduct utility expenses for my rental property, but not for my primary residence. Food, shelter, clothing and medical care are fundamental human needs,   but we still pay for them with after-tax money, and pay additional   sales tax. Only interest (and not principal) on a mortgage is   deductible in the US, which is great for people who take out mortgages   (and helps banks get more business, I'm sure), but you're out of luck   if you pay cash for your house, or are renting. Sales taxes are deductible. You can deduct sales taxes you paid during the year if you itemize your deduction. You can chose - you either deduct the sales taxes or the State income taxes, whatever is more beneficial for you. BTW in many states food and medicine are exempt from sales tax. Medical expenses are deductible if they're significant compared to your total income. You can deduct medical expenses in excess of 10% of your AGI. With the ACA kicking in - I don't see how would people even get to that. If your AGI is low you get subsidies for insurance, and the insurance keeps your expenses capped. For self-employed and employed, insurance premiums are pre-tax (i.e.: not even added to your AGI). Principle for mortgage is not deductible because it is not an expense - it is equity. You own an asset, don't you? You do get the standard deduction, even if your itemized (real) deductions are less - business don't get that. You also get an exemption amount (for your basic living needs), which businesses don't get. You can argue about the amounts - but it is there. In some States (like California) renters get tax breaks for renting, depending on the AGI. CA renters credit is phasing out at AGI of about $60K, which is pretty high. If this isn't a case where you would be willing to forgive the debt if they can't pay, it's a business transaction, not a friend transaction. Establish exactly what the interest rate will be, what the term of the loan is, whether periodic payments are required, how much is covered by those payments vs. being due at the end of the term as a balloon payment, whether they can make additional payments to reduce the principal early... Get it all in writing and signed by all concerned before any money changes hands. Consider having a lawyer review the language before signing. If the loan is large enough that it might incur gift taxes, then you may want to go the extra distance to make it a real, properly documented, intra-family loan. To do this you must charge (of at least pay taxes on) at least a certain minimal interest rate, and they have to make regular payments (or you can gift them the payments but you still won't up paying tax on the interest income). In this case you definitely want a lawyer to draw up the papers, I think. There are services on the web Antioch specialize in helping to set this up properly, and which offer services such as bookkeeping and monthly billing (aT extra cost) to make it less hassle for the lender. If the loan will be structured as a mortgage on the borrower's house -- making the interest deductible for the borrower in the US -- there are additional forms that need to be filled. The services can help with that too, for appropriate fees. Again, this probably wants experts writing the agreement, to make sure it's properly written for where you and the borrower live. Caveat: all the above is assuming USA. Rules may be very different elsewhere. I've done a formal intractability mortgage -- mostly to avoid gift tax -- and it wasn't too awful a hassle. Your mileage will vary. "Checks sold as ""business checks"" are larger than checks sold as ""personal checks"". Personal checks are usually 6"" x 2 1/2"" while business checks are 8 1/2 "" x 3 to 4 "". Also, business checks typically have a tear-off stub where you can write who the check was made out to and what it was for. In this computer age that seems pretty obsolete to me, I enter the check into the computer, not write it on a stub, but I suppose there are still very small businesses out there that doesn't use a computerized record-keeping system. These days business checks are often printed on 8 1/2 by 11"" paper -- either one per sheet with a big tear-off or 3 per sheet with no tear off -- so you can feed them through a computer printer easily. Nothing requires you to use ""business checks"" for a business account. At least, I've always used personal checks for my business account with no problem. These days I make almost all payments electronically, I think I write like one paper check a year, so it's become a trivial issue. Oh, and I've never had any problem getting a check printer to put my business name on the checks or anything like that." When your debt is forgiven, you have to consider the amount written off as an ordinary income item (with the exclusion of the debt originated from the purchase of primary home). If you're trying to write the debt off from your taxes - then it won't work. Even if you can expense the debt forgiveness, you will incur tax liability on your personal taxes side, and in addition you'll be out of cash in your business. So basically you'll end up paying it with after tax money, exactly the thing you're trying to avoid. In addition, you're dealing with related persons here, which means that the loss deduction might not be allowed (depends on the actual details of the transaction), so you might actually end up paying more taxes with this scheme that just paying off the loan directly (if your business pays taxes separately from your person). A loss on the sale or exchange of property between related persons is   not deductible. This applies to both direct and indirect transactions,   but not to distributions of property from a corporation in a complete   liquidation. For the list of related persons, see Related persons   next. You can and are supposed to report self-employment income on Schedule C (or C-EZ if eligible, which a programmer likely is) even when the payer isn't required to give you 1099-MISC (or 1099-K for a payment network now). From there, after deducting permitted expenses, it flows to 1040 (for income tax) and Schedule SE (for self-employment tax). See https://www.irs.gov/individuals/self-employed for some basics and lots of useful links. If this income is large enough your tax on it will be more than $1000, you may need to make quarterly estimated payments (OR if you also have a 'day job' have that employer increase your withholding) to avoid an underpayment penalty. But if this is the first year you have significant self-employment income (or other taxable but unwithheld income like realized capital gains) and your economic/tax situation is otherwise unchanged -- i.e. you have the same (or more) payroll income with the same (or more) withholding -- then there is a 'safe harbor': if your withholding plus estimated payments this year is too low to pay this year's tax but it is enough to pay last year's tax you escape the penalty. (You still need to pay the tax due, of course, so keep the funds available for that.) At the end of the first year when you prepare your return you will see how the numbers work out and can more easily do a good estimate for the following year(s). A single-member LLC or 'S' corp is usually disregarded for tax purposes, although you can elect otherwise, while a (traditional) 'C' corp is more complicated and AIUI out-of-scope for this Stack; see https://www.irs.gov/businesses/small-businesses-self-employed/business-structures for more. This answer is assuming you're in the US, which apparently you're not. I doubt that the rules in the EU are significantly different, but I don't know for sure. In case of an IRS control, is it ok to say that I regularly connect   remotely to work from home although in the work contract it says I   must work at client's office? No. Are there any other ways I can prove that this deduction is valid? No. You can't prove something is valid when its not. You can only deduct home office expense if it is used exclusively for your business, and your bedroom obviously is not. How do I account for this in the bookkeeping? Here is an example below:  This is how you would accurately depict contributions made by an owner for a business. If you would want to remove money from your company, or pay yourself back, this would be called withdrawals. It would be the inverse of the first journal entry with cash on the credit side and withdrawals on the debited side (as it is an expense).  You and your business are not the same thing. You are two different entities. This is why you are taxed as two different entities. When you (the owner) make contributions, it is considered to be the cash of the business. From here you will make these expenses against the business and not yourself.  Good luck, IRS Publication 463 is a great resource to help you understand what you can and can't deduct.  It's not a yes/no question, it depends on the exact company use, other use, and contemporaneous record keeping.