Ok so can you write off ingredients you purchase. I am assuming yes because it is a cost of doing business...flour doesnt arrive free on my doorstep
I sure as heck hope so. I have bought a lot of ingredients over the last year.
Yes, your ingredients become a "cost of goods sold."
Thank you leahs. When I saw that term I didnt know if I was supposed to have some formula for each cake and then write that off which would have been much more tedious. I have all my receipts of course I was just checking what others do. My first year in business so its all new to me.
Do you do your own taxes? I have always used turbotax and they do have a business version. Just curious.
I use turbotax but I don't have a storefront, so I think it would depend on how many deductions you want to take and how tricky your situation is. If you're not doing anything complicated turbotax is fine.
I do not have a storefront. I operate a legal home bakery so I am thinking turbotax should be fine.
When I spoke to someone in the irs when I first started my business they told me that I could write off a portion of my electric bill. I needed to figure out the percentage of space taken up by my kitchen and the cake fridge I have and then the percentage of time used for business as opposed to home use. Since the things that I use are the "big" electric users in the house he said I could increase the percentage based on that. That should prove to be the most dificult of my deductions so I think turbotax should be fine. Does anyone else that has a home based bakery deduct their electric?
I use turbo tax also. Usually you put the square footage of your space and it takes the deductions for electric, etc from that.
I'm probably missing a whole bunch of deductions, but I don't deduct for electric or water. I have no idea how the heck I'd figure out how much to realistically deduct, and I'd also prefer to be on the safe side in case I ever get audited. My husband is an auditor and he's extremely cautious about this kind of stuff, so I don't worry about trying to mess with it.
i decided to use a professional tax company to do my taxes. much easier and they let you know how to calculate deductions. they also let you know when you are missing something because they go through everything with you. i personally think it is worth the money to not have to hassel with it. if you have a seperate kitchen or office (not used for anything other than business use) you can deduct the "rent" paid... take your house payment and divide it by the sf of your house. then you can de the same with your business areas and calculate how much of your house payment is that space write that amount as "rent" on your taxes.