Uber has never once turned a profit, and is allowed to continue running their business. If you’re a small business owner running an ebay or ecom business, and you claim losses for 3 out of 5 years in a row, it’s likely that the IRS will audit you, and could deem you a hobby. Amazon is often cited as not generating a profit for many years, but is now profitable. For them, it was somehow okay to run a business making no profit! So like, how come small businesses can’t claim losses, but big corps can?

  • deafboy@lemmy.worldEnglish
    0·
    3 months ago

    IRS will audit you, and could deem you a hobby

    Are there any negative consequences? I’d prefer to be downgraded to a hobbyist. Instead, the government has increased my taxes to around 70% of my yearly revenue. Social democracy, fuck yeah!

    • lemmyman@lemmy.world
      0·
      3 months ago

      Profitability is just a proxy for whether someone is legitimately running a business, or just trying to save money on their hobby. Businesses can deduct expenses, hobbies cannot.

      So if you are running an etsy store or an engineering company and buy a 3d printer to make parts, the cost of that 3d printer is subtracted from revenue for tax purposes. If your “business” is actually a hobby, it’s not legally a business expense and therefore it’s not deductible

      (In the USA)

      • deafboy@lemmy.worldEnglish
        0·
        3 months ago

        3d printer is subtracted from revenue for tax purposes

        That makes sense. Since my profits always oscillated around zero, claiming any expenses had no practical effect.

        legitimately running a business, or just trying to save money on their hobby

        That’s actually how it started. We’ve installed linux on some old desktop machine with my classmate back in school, set up some services like webhosting, mail, jabber, and started to give access to people for free. No guarantees, no pressure. As we finished school, trying to turn it into a business was a logical next step. It never went big, but we just kept the thing around, bought newer hardware, moved it to a proper housing, did basic maintenance, and years later, here I am owing to the government thanks to my highschool hobby.

        • FireTower@lemmy.world
          0·
          3 months ago

          Talk to an accountant if you haven’t it sounds to me like you may be able to claim some deductions.

          If for every $100 gross income you make you pay $20 in taxes and $80 in expenses you may be able to claim some of your expenses to reduce your tax burden.