How to deduct money not from profits put into the business

Hello everyone,

So I started my photography business at the beginning of this year in the USA. It's a single-member LLC disregarded entity. I created a business checking and saving account. So far, I have made over a thousand dollars in profit, currently sitting in the business bank account. In a little over a month, I would like to buy a new camera and gear for my business which would run a little over four-thousand dollars. I was planning on putting five-thousand dollars into my business bank account from my personal account and calling it equity. Then purchasing the camera using my business account and writting it off at the end of the year as a business expense. Would I write that on schedule C form? And if so, how does it work, writting the camera off as a business expense but showing that the money I put into the account was not profit from my business? Thank you

 

KochuK
Employee Tax Expert

Deductions & credits

Hi ZachV, thanks for the question.

 

As you indicated, Single Member LLC is a disregarded entity for Federal income tax purpose, i.e. you only file Schedule C Profit or Loss From Business in your individual income tax return.

 

In Schedule C, you only need to report  Gross receipt or sales from business activities and various directly related business expenses in earning that revenue.

 

As you indicated again, the $5K planned operation funding is equity (not sales nor expenses), hence not relevant nor reportable in Schedule C.

 

When you purchase $4K camera and equipment to be used in your business, you can either capitalize it for depreciation or write it off as Section 179 expense deduction (Schedule C, line 13)

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

 

Hope the above helps.

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View solution in original post

Deductions & credits

It does; thank you for clearing that up.