Small Business Tax Deductions

Captain Cocoa · #1 (**permalink**) August25th, 2008

I'm wondering what cake decorating items are deductible. I think the basic supplies are, such as ingredients, boards, etc., but would something like a pan be?

Pootchi · #2 (**permalink**) August25th, 2008

here where I live, anything under 200$ counts, but if it's over 200$, only a certain % counts each year as long as your business exist. Like a KA, refrigerator, oven.... and so on but I'm in Canada, I don't know for the USA.

Captain Cocoa · #3 (**permalink**) August25th, 2008

Thanks for the reply. I'm in the US, though, and according to what I've found out so far, anything that adds value to a business cannot be deducted as an expense. Hmmmmm. That sucks! lol. I've bought a lot of pans this year. Oh, well. On the bright side, if I ever sell my pans at a loss, I can deduct it then!

If anyone has any info about a small cake business in regard to US federal tax laws, please share!

cakebaker · #4 (**permalink**) August25th, 2008

I'm no tax specialist, but basically, if I spent money on it for the business, it's a tax deduction.

That's way over simplified, but I really think you're misunderstanding what you can and cannot deduct. Pans are an expense. They are deductible.

I can't stress the importance of having someone who knows what they're doing handling your taxes. Self employed taxes are so complicated, I just can't imagine trying to do them on my own.

parrolet313 · #5 (**permalink**) August26th, 2008

I assume you're a sole proprietor? (not a corporation or a partnership)....I'm a CPA - and yes - you CAN deduct pans! In THEORY - you can directly deduct all expenses such as ingredients, cake boards, and other items that go directly into the cake. As pans, KA's, and things of that nature are considered assets, (as you said - they add value to the business) they are supposed to be depreciated. This means that you find out the "life expectency" of a pan and take a certain percentage of the cost over x amount of years. There are IRS tables that determine the life expectency of diffferent assets. HOWEVER - you can take a "179 expense" which is when you can directly take a deduction for the "assets" if you make a profit AFTER all the other expenses are covered. (Confused yet?) Do you do your own taxes? You may want to talk to a professional who can give you better advice based on your individual situation. Hope that helps......

Captain Cocoa · #6 (**permalink**) August26th, 2008

Quote:

Originally Posted by parrolet313

Hope that helps......

Yes, it helped a lot! Thanks for the info.