# US tax deductions for screenprinting business?



## jomama (Apr 17, 2013)

Greetings all, I have hesitated to get a business license, as I don't like all the fees and taxes associated with it. but now that paypal has gotten involved, and my orders are ticking up, it seems it's an inevitability at this point.

My question is, I invested a couple thousand dollars in all of my supplies, setup, etc. in the past year (2013). I have most if not all receipts of everything I've bought related, and was wondering if anyone else had experience on this matter?

Thanks!

*edit: can you also deduct the costs of the website and business license?


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## splathead (Dec 4, 2005)

Generally, you can deduct all or part of anything you buy that is used by your business, this includes license fees, website fees, equipment, supplies, advertising, , travel, entertainment, rent, etc. 

You can get additional information and tax forms that list all the categories of deductions from the IRS.gov website. There are also books you can buy or even hiring a bookkeeper or accountant if you don't want to mess with the stuff.


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## binki (Jul 16, 2006)

Hmmm, there really are no such things as tax deductions. There is income and expense. Subtract the latter from the former and you have profit or loss. That is what you pay or don't pay taxes on as the case may be.


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## splathead (Dec 4, 2005)

Unfortunately, it's not as easy as totaling up all your expenses, subtracting that figure from your income and you get your taxable amount. Certain things are and are not _tax deductible_ and even some of those expenses are limited. For example, only 50% of what you spend on business meals are deductible. 

The IRS site uses the term _tax deductible_ and _tax deductions_ quite liberally. The site is surprisingly a pretty easy read. I encourage the OP to browse through it, then talk to folks who know more about business income tax than we do.


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## jomama (Apr 17, 2013)

thanks for the insight. what made perfect sense was totaling income and expenses and taking the difference. since i just got started (with only a couple small sales), my expenses far outweigh the income so far. i guess it's a good time to report it all!


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## GordonM (May 21, 2012)

There certainly are tax deductions, because the IRS is primarily interested in your gross income. Anything else is a provable deduction that reduces your tax liability. You cannot, for example, simple enter your net income. You must show the total of gross receipts, and then provide any itemized deductions or cost of goods you wish to claim on your Schedule C.

After saying this, like legal advice, DO NOT take tax advice from random people on a forum. You are legally responsible for your tax decisions, so those decisions should be based on sound advice provided by a bona fide authority or resource.

A cynical IRS revenue agent might interpret your first post as avoiding paying taxes to begin with (foregoing deductions, flying under the radar with no business license), so if you consult with someone at the IRS about what to do, be careful how you word your question!

If you're in the red for this year, I'd suggest you consult with a tax pro now before the end of the year rolls around.


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## best26102 (Sep 29, 2013)

so the people you should call are titled CPA's in your state who know local tax laws and USA tax laws.... I got one of the best in Texas


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## binki (Jul 16, 2006)

Meals may be 100% expensable for a business purpose such as a meeting lunch. The 50% amount is for travel. The formula is gross revenue less expenses = taxable income. So really it is an income deduction. . 

No matter what you call it don't forget to take everything you can. If you are a c-corp you can do virtually unlimited cash and non cash benefits as expenses. Health insurance, non covered health expenses, a Auto, cell phone, and so on. The only thing is it needs to be in a defined plan and available to all of your employees 

Good luck and get a CPA. They are invaluable.

See http://www.irs.gov/pub/irs-pdf/p463.pdf for expenses.


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## GordonM (May 21, 2012)

binki said:


> The formula is gross revenue less expenses = taxable income.


Define "expenses." An expense could be t-shirt blanks which are inventory. Depending on how you account for inventory, these "expenses" cannot be simply deducted until the inventory is sold. There are many other examples.

People who treat all "expenses" as alike soon find themselves in hot water and likely owing money to the IRS. The IRS is careful to use catch phrases such as "allowable expense," which means everything from the proportion of the cost you can deduct, to when you can deduct it. The point to remind the OP is that ours is not a simple system where you can tally up your checks, subtract anything you had to pay for, and call it even.

"Income deductions" is not an accurate term, because you can have many costs associated with your business. Only certain ones are allowable to reduce your tax liability. A tax deduction is very specific in its legality and purpose.


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## splathead (Dec 4, 2005)

binki said:


> Meals are 100% expensable for a business purpose such as a meeting lunch.


Not anymore. Meals are only 50% expensable, even if you cater lunch in your own office.


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## greyhorsewoman (Jul 19, 2007)

On a small scale, tax programs, like Turbo Tax, will walk you through, step by step, in filing your taxes. However, if you have little or no bookkeeping background, a CPA or tax accountant probably would be more advisable.


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## binki (Jul 16, 2006)

splathead said:


> Not anymore. Meals are only 50% expensable, even if you cater lunch in your own office.


IRS pub 463 spells out when the 50% limit does not apply. 

There are still a few instances



GordonM said:


> Define "expenses." An expense could be t-shirt blanks which are inventory. Depending on how you account for inventory, these "expenses" cannot be simply deducted until the inventory is sold. There are many other examples.
> 
> People who treat all "expenses" as alike soon find themselves in hot water and likely owing money to the IRS. The IRS is careful to use catch phrases such as "allowable expense," which means everything from the proportion of the cost you can deduct, to when you can deduct it. The point to remind the OP is that ours is not a simple system where you can tally up your checks, subtract anything you had to pay for, and call it even.
> 
> "Income deductions" is not an accurate term, because you can have many costs associated with your business. Only certain ones are allowable to reduce your tax liability. A tax deduction is very specific in its legality and purpose.


I wasn't trying to imply it was that simple but rather any legit expense in the course of business will reduce taxable income. 

As always, get a CPA and you won't have to worry about those things. Using software like quickbooks will help as well


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