What do you need to have as evidence to have a business write-off? I am planning on writing my laptop off as a business expense, as I use it for programming and copyrighting work. I was told that I do not need to have a business license. What, then, do I need? I reside in the United States.
You don't need a license if you do everything in your name. Check your local laws though. All you need is the receipt, you will write it off as an expense on your 2007 tax return
Here's a tip for ya... Don't get your accounting advice at DP. Talk to an accountant because telling an angry IRS agent that some guy online told you to save your receipts isn't going to carry much water.
Oh, I know. I have an accountant that does my finances starting this year. Just haven't bothered her yet. Probably won't till next tax season.
I really have a feeling you need to have a registered company to be able to have a right off but that is just me
I had the same feeling. But a business leader in my community told me otherwise, as well as my father. Interesting.
Of course its best of you seek assistance from an accountant. But...... I write off my items every year. I don't have a business license. Of course you have to advise the IRS that you have a business, which you can do on your 2007 taxes. If the business is in your name, and your a sole proprietor than there is nothing more that you need than a receipt. You would need to claim that you use the laptop exclusively for business, which isn't hard to do. By the way, it wouldn't be worth an IRS agents time to come after you for fraud(if you accidently filed wrong). It woudn't be worth the comission! Unless you have millions in revenue per year. What did your father and the community leader advise you?
The community leader said to do it, my father said talk to an accountant. I am talking to an accountant no matter what, so I am follow both of the advices they gave thanks.
While I agree completely with the above statement, here is what you must do to stand up to an audit for a business deduction of property that might be used in a business and for personal use. You must maintain written records of the usage of the item. You deduction will be limited to the depreciation for the year times the business %. Not sure what the depreciation time is for computers. Pretty sure it must be 7 years or less. Five year would be my best guess. If you elect to 179 expense it the first year and the business use in any later years is less than the first year, some of that expensed amount is subject to recapture. If the business use falls below 50% during the life of the product some of the expense is subject to recapture. Now you must need deductions a lot more than I do to dance through all those hoops. I have never expensed or depreciated a computer even though I use mine in my businesses. If you prefer to ignore this post, I competely understand though ignorance isn't an adequate defense.
Thanks colbyt. That is probably everything I will have to go through. For a couple of grand, I think it is worth it. I have all my clients documented, and have saved all the work I did for them. Hopefully that is proof enough.
You need to be registered with your local Registrar of Companies, and the laptop should be in your companies name. Only then you should bother . But local laws change from place to place. So its a better option to take legal advice from any of your legal and tax adviser. ~G
probably one of the best business threads i've seen in awhile because I actually learned something... I was thinkign about attempting to write off my new laptop by myself but I won't bother anymore
Don't be discouraged, guy123. I'll talk to an accountant sometime before next April and let you know In all seriousness, though, if you are dealing with a couple of grand it is well worth the trouble. Even if you don't get anything out of it in the end- it's worth the amount of money you might get back.
ben_polska - a couple of grand I use it everyday for business purposes. So hopefully I can slide by on a good return.