Negative profits

[Hstevens493]

I started my small business as a DEA in 2023. So far I’ve made about $600 but I’ve spent about $3000 just starting my business on things like education, website design, things like that. I’m hoping to make more money by the end of the year, but it definitely won’t be more than what I have spent. So do I just clean deductions on the business expenses? Do I do anything with the money I’ve made, if it’s not technically a profit?

[KCariniEA]

Hey @Hstevens493, great question. Congrats on starting your business! 

You'll claim all your income and expenses on your Schedule C - the tax form used to report a sole proprietorship/self employed business. If you spent more than you made, you don't have to pay as much in taxes. Many businesses aren't profitable in their first year, and they are still entitled to claim the expenses they paid. As for what to do with the money you've made, that's up to you - you just have to report it. 

Please reference the article linked below. 

Reporting Self Employment Income and Expenses