I want to start a new business.

[73chgrSE]

I had an idea to start a new business that restores old cars. The thing is I will only really work on mine, but because it's a business,all of the parts I buy could be written off.

Or maybe start a race team. that never really races. Just purchase Hi-Po parts and stuff at a discount.

[CB]

how old are you?
Sounds like a 17yo, no offence, dude

[Silver R/T]

do you have a job? its a start to a future business

[73chgrSE]

I doubt a 17 yr old would be concerned about taxes.

[73chgrSE]

do you have a job? its a start to a future business

Yeah, but it's not really like work though. I just want to be able to spend more time/money on my car honestly. I'm serious about starting a racing divison. How about "Rex Racing". It has a nice ring to it.

[eSJayDee]

A couple of problems if you're really trying to do this legit.  Bear in mind, I do not own my own business, but was a 'partner' in an S corp.

A business is designed to make money.  Unless you have a means of generating revenue, you'll eventually run into problems.  (I don't know the viabiliity of a venture that isn't profitable).  AFAIK, tax 'right-offs' are only good to offset revenue.  i.e. You buy a car for 10k,buy & install $5k of parts & sell the car for 20k.  You only have a 'profit' of $5k, not $10k.  They don't just come off your 1040 calculated taxes.

Finally, unless you do this on a reasonably large scale, I think the headaches and expense of forming and maintaining a business will outweigh the savings you may achieve due to your improved buying clout/status (i.e. some businesses give discounts to resellers or other businesses.)

[gtx6970]

To clasify as a business It should MAKE money not just spend it . Whose Money is the business spending ?

True business's have a state tax and federal ID number. Which means the feds will keep an eye on how much money it makes and how long it will let you show a loss. After 3 to 5 years it better start showing a profit of the feds will come a knocking.

If your just after a discount on buying parts . You will have to buy in bulk.

Depending on the part in question this could mean as a little as 10 pieces to as many as 1000 , or more.
The more you buy, as a general rule the cheaper it gets per piece.

[69_500]

I started D.E.L. Productions a little over a year ago, and I can tell you this it isn't easy to get new busniess in many fields. I can say this I've definately spent way more to set up and get the business running than I've made over the past year and a half. So far the cost of setting it up and opperating is about 15 times the amount that I've made.

[73chgrSE]

I've owned a successful recording studio for 8 years now. I'm ready to go racing!!!

[hotrod98]

I've been drag racing for the last 32 years. The first time I used the racing as a tax write-off, I was audited big time. They ran me through the ringer. I never tried that again. It's not worth the hassle unless you're racing full time as a living in my opinion.

[triple_green]

People who work for corporations have a study paycheck, but will never get rich (me)

People who work for other people, same as above, but without the guarentee of a study paycheck.

People who work for themselves, just own a job.

I have seen too many good mechanics, painters, etc. Who tried to expand by leasing a building and hiring mor people. I have seen very few who could "scale up" successfully. In fact two of my friends are running themselves into bankruptcy doing this.

Two ways Robert Kiyosaki says to make money is:

Off of other people's labor and other people's money (this is not s pitch for MLMs)

Have a business with a new idea (this is still hard, becuase you still have to know how to run a profitable business).


As for tax benefits, they do accrue to the business owner if handled correctly within th tax code. However if the IRS smells that you are doing something just for the tax break, they will "get you good".

[dkn1997]

you can show reasonable losses for a few years, as long as you show that you have some other source of income.  I had a side business for a few years, showed a loss every year until I closed it down.  (@3-4years)  also had a full time job with income to show where the money came from.  i was able to write off much of my engine build for the charger (engine was for work van, ehem), plus you can write off a portion of your phone/internet access if you work out of your home, plus a reasonable amount of fuel and meals. 

I stopped short of getting really greedy and resisted the urge to write off trips, home improvements, etc..
I did however write off every tool I bought during that time.

But remember, we are talking small potatos here.  it was a side business that never took in more than 10k/year.