JohnB5677
Expert Alumni

Business & farm

Yes, it is possible to start a business that did not make any money in the first year.  However, when did you "Open your doors for business".  This is the actual date that the business started.

 

As far as the out-of-pocket expenses go, they may actually be "Startup costs".  "When starting a business, owners should treat all eligible costs incurred before beginning to operate the business as capital expenditures that are part of their basis in the business. Generally, the business can recover costs for assets through depreciation deductions.  For costs paid or incurred after September 8, 2008, the business can deduct a limited amount of start-up and organizational costs."

Here’s how businesses can deduct startup costs from their federal taxes

When you say DBA, I think you're referring to your Tax Identification Number (TIN).

 

"If your business claims a net loss for too many years, or fails to meet other requirements, the IRS may classify it as a hobby, which would prevent you from claiming a loss related to the business. If the IRS classifies your business as a hobby, you'll have to prove that you had a valid profit motive if you want to claim those deductions." When the IRS Classifies Your Business as a Hobby


 

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