# Business questions



## Stephanie Stewart (May 22, 2015)

So I finally have my LLC as of 2 days ago Woo Hoo!! I know some say that an LLC is overkill for photography but I'm one of those better safe than sorry people. So now that my LLC is formed and I'm all set with state, I have some questions. I'm opening a business account on Tuesday so I will be all set there as well. My question is, if I bought a new camera and several lenses and misc. items I needed a week to two weeks before my LLC was established (I know now I should have waited) are those items still tax deductible? I'm trying to make sure everything purchased is documented and accounted for! Thanks for any tips!


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## tirediron (May 22, 2015)

Stephanie Stewart said:


> So I finally have my LLC as of 2 days ago Woo Hoo!! I know some say that an LLC is overkill for photography but I'm one of those better safe than sorry people. So now that my LLC is formed and I'm all set with state, I have some questions. I'm opening a business account on Tuesday so I will be all set there as well. My question is, if I bought a new camera and several lenses and misc. items I needed a week to two weeks before my LLC was established (I know now I should have waited) are those items still tax deductible? I'm trying to make sure everything purchased is documented and *accounted for*! Thanks for any tips!


Ask your accountant.  Seriously...  tax law varies by state/province/municipality (You don't list a location in your profile) and there are a LOT of factors which can come into play and it's much badness if you get it wrong.  My _*guess*_ is that you may be able to deduct a portion of the costs, but until your business is showing a return, probably not a lot (or everyone would just start a "business" for the deductions).


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## Stephanie Stewart (May 22, 2015)

Thanks!  I couldn't imagine starting a businesses for tax deductions! I've spent several, several thousands on equipment legal documents etc! I've read (don't quote me on it) in the start up year the irs doesn't necessarily  expect a return,  a lot of businesses don't show a real profit until a year or two later.  Who knows though,  so I will definitely consult an accountant.  To do it just for deductions seems silly,  although I'm sure there are those that do!


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## curtyoungblood (May 23, 2015)

It also isn't quite as simple as just deducting your camera expenses. I am certainly no accountant, but I'm pretty sure you can either deduct the full cost the first year or go the depreciation route. The choice has an impact, and your specific situation may effect the choice.


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## KmH (May 23, 2015)

I highly recommend you retain and rely on business/legal advice from a qualified attorney and a qualified accountant.
An online photography forum is not a reliable place for legal advice.
Unfortunately, some attorneys and some accountants don't give good advice either so chose carefully among those in those professions.

Are you using the accrual accounting method, or the cash accounting method?
You'll also need to check your states Use Tax laws because you may owe your state use taxes for any gear you buy from out of state.
If your state has sales tax be sure you are registered for that with your state so you can collect and forward the sales taxes due the state.

Next is that the IRS can reclassify your 'business' as a 'hobby' if you do not make a profit "during at least three of the last five tax years, including the current year". If they were to reclassify your business as a hobby it is also likely they will also disallow business deductions made in those years and send you a bill for back taxes owed.


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## dennybeall (May 23, 2015)

Two biggest mistakes made by small business newbies:
 #1 They don't get totally separate business bank accounts and do ALL business only in business account and
#2 They confuse tax rules/law and business rules and laws.
Federal Tax law is complex for individuals and even more complex when you add a business, not so bad if it's a sole proprietorship or partnership (LLC in some states) but it jumps to a whole new level if you get into being a corporation.
The small business tax laws have gotten a lot more complex in the last 10 years or so.  TurboTax does a good job with sole proprietorships filing the Schedule C.
I'd suggest that you either spend a lot of times learning about the fed and state tax laws or get an expert to help you.
The Fed Tax laws can be summed up briefly - If you actually try to make a business for profit you can deduct any money you spend as an expense But you have to declare any money/value you receive.  You pay tax on any profit.  Sounds pretty simple until you start reading the rules......................
Most importantly - start your photography business and keep records of every penny you spend and every mile you drive in any way related to the business. If you have the records you can do the taxes with help. No records and all is lost!!!


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## Al Lipscomb (Jun 2, 2015)

Setting up an LLC is easy, doing it right can be hard. Get proper legal and accounting advice before you find out you have an issue. You also need to make sure your insurance is right for your business structure.


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