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I am claiming my photography business for the first time and…

I am claiming my...

I am claiming my photography business for the first time and i'm wondering what percentage of my investments into my business do i get back?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

I know that they take 25% of each photo session I do, but Im not sure what percentage I get back from all the money I put into my business.

Accountant's Assistant: Is there anything else important you think the Accountant should know?

Also, I bought my camera about 2 years ago for $4000. Is there a way I can claim it every year since I do use it and the value decreases overtime.

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Answered in 15 minutes by:
3/27/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,319
Experience: Taxes, Immigration, Labor Relations
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You will be able to deduct ALL your business investments.

The only issue is when to deduct.

Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit.

.

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

.

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation.

.

If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage.

.

You must capitalize, rather than deduct, some costs. These costs are a part of your investment in your business and are called capital expenses. Capital expenses are considered assets in your business.

Your camera is a good example of your capital expense.

If you used it for personal purposes - and converted for business use - your basis will be the LESSER of your cost ($4000) and the FMV (fair market value) at the time of conversion.

Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property.

Depreciation begins when a taxpayer places property in service for use in a trade or business or for the production of income. The property ceases to be depreciable when the taxpayer has fully recovered the property’s cost or other basis or when the taxpayer retires it from service, whichever happens first.

.

Questions?

Let me know if that is helpful.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,319
Experience: Taxes, Immigration, Labor Relations
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