Question: How do I file my taxes correctly? I have been running my small business with no employees for a year and someone told me that I could recover some of my money that has been spent on supplies to build the company and I don't know when or how to do that.  I file monthly for my tpt license, and I think I need to do the end of year taxes and show no sales to recover some money.... please help if you know!?

Answer: You are considered to be a sole proprietor, and will file a Schedule C with your personal income tax return (1040). IF you have no sales, but your intent is to produce income, you do still have a business. The IRS won't let this go on forever, but does understand that starting a business takes some time. \nYou certainly can deduct almost all of your expenses, however, some things can be deducted now, and some things must be depreciated, or taken over the expected life of the item. For instance, office supplies and utilities can be taken in one year, but buildings and equipment must usually be depreciated. What you can deduct and how it is deducted depends on what the business is, where it is located, and how it operates. I'll agree that you don't need an accountant, as long as you are keeping good records on your own. I do business taxes all the time for people who do their own books. I also own my own business (seperate from my tax job), and am familiar with deductions. \nOn the Schedule C, you'll need to show whatever sales you actually made, and then take your deductions from that in order to stay legal. The Sch.C has lines for all of that information, and I'll attach a copy, as well as instructions. Be aware: it is possible to have what is called a Net Operating Loss, allowing you negative income. This can be carried from one year to the next because you typically cannot take it all in one year. \nYou also need to be aware of the Schedule SE for what is called Self-Employment tax. This is the form that has you pay your Social Security and Medicare taxes which would otherwise be withheld form your paycheck. While you don't pay this tax if you have zero or negative income, you will eventually - 'cause your business is going to take off:)\nAlso, when you're looking at things you can deduct, keep in mind that you may have the ability to put money into an IRA, SEP, or SIMPLE plan, depending on your income and needs. Your contributions to these are generally deductible, and this helps you plan for your future as well. \nAnd now to defend myself. One of the other answerers suggested that you not go to an "H&R Block or Jackson Hewitt type place". I do not know what it takes to work at JH, so please don't take this as a slam on them. However, to work for H&R Block, you must be able to do a basic Schedule C and SE. To work for HRB for more than one year, you must take continuing education of at least 24 hours (going to 30 soon) in the off-season. I don't usually promote HRB on here, because I do work for them, but in this case, I'd hate to see you pay a lot to an accountant if you don't have to. Call ANY reputable tax preparation service and ask for someone who is knowledgable about Self-Employment. Talk to them about what you can and cannot deduct specific to your business. This information should be available to you at no charge (if someone wants to charge you for this, I'd leave and go elsewhere). And finally, tax preperation fees are indeed deductible for both individuals and businesses in different ways. So are any legal fees or professional association fees you may encounter. Please let me know if I can be of further assistance. You can e-mail me through the Y! Answers site... keeps me accountable so that I'm not accused of trolling for clients, which I hope is not how this is taken :)
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