Uber has never once turned a profit, and is allowed to continue running their business. If you’re a small business owner running an ebay or ecom business, and you claim losses for 3 out of 5 years in a row, it’s likely that the IRS will audit you, and could deem you a hobby. Amazon is often cited as not generating a profit for many years, but is now profitable. For them, it was somehow okay to run a business making no profit! So like, how come small businesses can’t claim losses, but big corps can?
That makes sense. Since my profits always oscillated around zero, claiming any expenses had no practical effect.
That’s actually how it started. We’ve installed linux on some old desktop machine with my classmate back in school, set up some services like webhosting, mail, jabber, and started to give access to people for free. No guarantees, no pressure. As we finished school, trying to turn it into a business was a logical next step. It never went big, but we just kept the thing around, bought newer hardware, moved it to a proper housing, did basic maintenance, and years later, here I am owing to the government thanks to my highschool hobby.
I’m not sure I understand why turning it into a business was the next step unless it was 1999. That market was saturated almost immediately. The web hosting may have had some potential, I guess.
It sounds more like you fell into exactly the situation that these laws are designed for—you had a big hobby, thought that made it a business, didn’t have a plan to make real money with it, and inadvertently may have committed some light tax evasion if you claimed anything as an expense. Hence, audited.
An audit isn’t an accusation of guilt, it’s an investigation into unusual or unorganized practices, which is exactly what you described doing.
Yes. Screw the small businesses. All that competition is just fraud and burden to the real corporations :D /s
Talk to an accountant if you haven’t it sounds to me like you may be able to claim some deductions.
If for every $100 gross income you make you pay $20 in taxes and $80 in expenses you may be able to claim some of your expenses to reduce your tax burden.