Writing off equipment?

[foreigndog]

I'm just starting up a little production business and was wondering if anyone can answer a few questions for me?
1. Can you write off equipment on taxes?
2. How would you go about registering a business name?
Thanks to anyone who can fill me in on these
questions.

[dcornutt]

Hi,
i can help with the tax situation.

Go to the irs web site..and download the publication on Section 179 expense.

Basically, you can, of course, write off your equipment purchases that you have for the production of income.

You can also "group" certain things..for instance..you can write off..your computer, the 001..or tdm..and all associated cords, etc..as ONE item.

You have to depreciate assets..and the depreciation methods allowed are different for diff asset types.

So, other good publications are the "small business tax guide"..and the "depreciation" guide.

the section 179 expense is simply a "type" of depreciation that allows you to "expense" the total cost of your purchase (with certain limitations) in one year..instead of spreading it out over several years.

If your equipment qualifies for section 179 expense..and it does..you can make the decision whether to expense it all..or..depreciate over several years..yourself.

Usually, musicians, production houses..etc..buy lots of equipment every year...so If you have lots of income..its good to expense it..up to the limit...to lower your tax liability..and..subsequent social security (self employment tax) that you would have to pay.

If you have no income..and are showing a loss...You can "carry over" your section 179 expense not allowed in the given year..to the following year..until it is fully expensed.

It is aggressive depreciation to lower your taxs..and..it is much easier to implement than other depreciation schedules.

You simply fill out the sec 179 form..and attach to your schedule C. List the amount..etc.

Discuss this with your accountant...as to which would be the best strategy.

If you suspect..that you may have little income for the next couple of years..but..that you anticipate very large income after that..you might want to use a depreciation schedule..that allows for more write off during the later years.

Online IRS has all the info you could possibly care to read on the subject.
If you are doing your taxs yourself..I suggest..reading all of these you can..doing your tax..then...have a prof accountant look over them (it doesn't cost much).

As for the name...as far as IRS is concerned..it doesn't matter what you want to call your company. You don't have to register your "name" with them..just write it on your tax form. However, if you have employees..etc..you may have to register..and get an id number from them.

Copyright is a whole nother thing. If you want to copyright your name..then..there is another process for this..totally unrelated to tax's.

Hope this helps
dcornutt

[foreigndog]

Hey thanks for the useful info. I'll check into it.

[Barnabas]

I also use Form 4562, where I can list my Section 179 expense and also list vehicles you use in your business.

For registering your business name, go the the Register of Deeds in the capital city in your state. I think I paid a one-time fee of $8.00 to register my business name for the whole state. You might need a Privilege License to do business in your city. The Privilege License will register your name in your city. I pay $25 anually for this. This came from our city municipal building. It will be near the zoning office.

These expences are deductable on IRS Form C.

Chris



------------------
Chris Droessler
www.barnabas.com Barnabas MultiMedia

[dcornutt]

You may also qualify for a deduction for the business use of your home..or..home office deduction.

If your home is your regular place of business, then..you may be allowed to deduct a percentage of your rent, and electric bill..and..a 2nd phone..(but not the first)...off your taxs.

If you have a studio in a seperate building away from home..this is not a concern..but..sometimes..I have found people are not aware of this particular deduction.

The key to this..is to be reasonable with the space you allow. This particular deduction can possible give you a higher audit risk...but generally only if the amount (%) you are deducting is far above average for your particular profession.

In other words..saying you use 90% of your living space for your studio..will likely get some sort of attention.

Check it out.

dcornutt