What is the name of your state? California
Situation One:
I own a small online business. I believe I did an excellent job in keep tracking of deductibles (domain names, advertising, hosting, etc.). I decided to invest my business income by purchasing other online property (domains & websites). Now my problem comes from that fact that the IRS (and my accountant) say that domain names are depreciated over a 15 year period. I was unaware of this when I originally purchased the online properties, but I plan on learning from my mistakes.
My problem is that my taxes owed are greater than cash I have from the business. For example, let's say that I made $25,000 in which I used $23,000to purchase online properties, leaving me with $2,000 cash in hand. Due to the appreciation I would be taxed at about $21,000, thus owing far more than the $2,000 I have available.
I am stronly discouraged by this because I will now be spending nearly 1/4th of this years income to paying off last years taxes, thus hindering my expansion abilities.
Also, my business was started Dec 2004, and I am a teenager (not a minor), in case there are any tax breaks for new-businesses or teenage owners etc.
Question 1: Are there any statues that could help me dwindle down the tax payment (EG: can't owe more than net-income regardless of depreciation )?
Situation Two:
I also work for a corporation (IE: I am an employee and receive a paycheck). My work income alone is in a fairly low tax bracket. My business income alone is in a fairly low tax bracket. When combining the two I am in a higher tax bracket and I am thus required to pay more taxes (doh! ).
Question 2: Is there anyway for me to legally seperate my business income and my personal income into two seperate incomes? I know I wouldn't be able to use my business income for personal purposes (unless I report it as such), but I would have no problem keeping my business income inside my business and retaining any earnings.What is the name of your state?
Thank you for taking the time to read this (and thank you for replying. )
Situation One:
I own a small online business. I believe I did an excellent job in keep tracking of deductibles (domain names, advertising, hosting, etc.). I decided to invest my business income by purchasing other online property (domains & websites). Now my problem comes from that fact that the IRS (and my accountant) say that domain names are depreciated over a 15 year period. I was unaware of this when I originally purchased the online properties, but I plan on learning from my mistakes.
My problem is that my taxes owed are greater than cash I have from the business. For example, let's say that I made $25,000 in which I used $23,000to purchase online properties, leaving me with $2,000 cash in hand. Due to the appreciation I would be taxed at about $21,000, thus owing far more than the $2,000 I have available.
I am stronly discouraged by this because I will now be spending nearly 1/4th of this years income to paying off last years taxes, thus hindering my expansion abilities.
Also, my business was started Dec 2004, and I am a teenager (not a minor), in case there are any tax breaks for new-businesses or teenage owners etc.
Question 1: Are there any statues that could help me dwindle down the tax payment (EG: can't owe more than net-income regardless of depreciation )?
Situation Two:
I also work for a corporation (IE: I am an employee and receive a paycheck). My work income alone is in a fairly low tax bracket. My business income alone is in a fairly low tax bracket. When combining the two I am in a higher tax bracket and I am thus required to pay more taxes (doh! ).
Question 2: Is there anyway for me to legally seperate my business income and my personal income into two seperate incomes? I know I wouldn't be able to use my business income for personal purposes (unless I report it as such), but I would have no problem keeping my business income inside my business and retaining any earnings.What is the name of your state?
Thank you for taking the time to read this (and thank you for replying. )