If you are self-employed and you own an operate a business you are well aware of the fact that you must have an accurate record of the business that you transact each working day. It costs money to operate any business and every person does need a way to determine if that business is making money or if he or she will soon be out of business because the expense to operate that business exceeds the amount of money that the business earns.
On the other hand, if your business is not your primary means of earning a living, such a business can be an excellent tax deduction from your total income. You might be in love with collecting and reselling some of your antiques but your level of activity in that area of interest is not enough to keep you healthy and alive.
As your knowledge and experience in the field of the antique business increases, so too should the amount of money that you earn from the enjoyment of, up to now, what is just a very expensive hobby that you truly enjoy. At some point in time your hobby can become a money making business but will that business continue to make money for you during bad economic times? Would you give up your primary means of employment and become an antique dealer?
Most people who love antique items do have a way to deduct some of the cost of those antique items from their annual income by making an in-home business out of their antique collecting hobby. In so doing, the Internal Revenue Service will help you pay for the future purchases that you make and add to your collection. However, your tax deduction comes to an end when your antique business starts making real money for you when those antiques that you purchased in the past are sold for more than you paid for them.
Additionally, that income is added to your total income and can cause you to pay more taxes on that total income because your increased income puts you into a higher percentage tax bracket. As such, operating a successful antique business can cost you a whole lot of money in the long run if you choose not to give up your other means of earning a living. Then again, operating a losing antique business allows you to deduct that loss from your total income and might cause you to be in a lower tax bracket that can offset the cost of those new antique purchases you make just because you love to collect those objects of interest.
Like it or not and no matter what kind of business you own and operate, if your make money from that business you will have to pay taxes on the profits of that business. That is a fact of life and the cost of doing business within the United States of America, as well as other places on Earth where each citizen makes a contribution to the country where that citizen lives and works.