Failed business reimbursement?


M

Matt

Hello all,
I was wondering if I could get some advice from you all?
I am debating opening up a private practice where I would do
therapy for children and adults. I am a licensed social
worker and could bill insurance companies. The big concern
would be if I could not attract clients and my business
would fail. If that happened, would I be able to get any of
my money back in the form of a tax cut?

The expenses I would have would be about 400 dollars start
up, plus 400 dollars of expenses (the biggest being rent)
each month the business is open. If I ran the business for
6 months (400 + 400 X 6 = 2,800.00$), would I be able to get
some of that back? Me and my wife both have full time jobs
and make about 78,000 combined, no children.

Thanks for your input!!!
Matt
 
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G

GenFinSvcs

I was wondering if I could get some advice from you all?
I am debating opening up a private practice where I would do
therapy for children and adults. I am a licensed social
worker and could bill insurance companies. The big concern
would be if I could not attract clients and my business
would fail. If that happened, would I be able to get any of
my money back in the form of a tax cut?

The expenses I would have would be about 400 dollars start
up, plus 400 dollars of expenses (the biggest being rent)
each month the business is open. If I ran the business for
6 months (400 + 400 X 6 = 2,800.00$), would I be able to get
some of that back? Me and my wife both have full time jobs
and make about 78,000 combined, no children.
If you are conducting a business and it produces a loss,
that would be able to be used on your tax return. You need
to be advised that you would not get back dollar for dollar.
If you are in the 15% tax bracket and lost $2000 on your
business, that would only be a $300 reduction in your tax
bill. See a local tax professional who can assist you in
determining how to proceed.
 
U

UncleFrank

I was wondering if I could get some advice from you all?
If you are conducting a business and it produces a loss,
that would be able to be used on your tax return. You need
to be advised that you would not get back dollar for dollar.
If you are in the 15% tax bracket and lost $2000 on your
business, that would only be a $300 reduction in your tax
bill. See a local tax professional who can assist you in
determining how to proceed.
I would take a real close look at your projected start up
costs.

I belive as others probably would thay are GROSSLY
underestimated.

Many an expert Craftsman is just that an expert craftsman,
and not a businessman!

Better yet ...from a distance a donkey looks like a
thoroughbred...but won't be at the fininsh line..
 
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G

Gene Prescott

I was wondering if I could get some advice from you all?
I am debating opening up a private practice where I would do
therapy for children and adults. I am a licensed social
worker and could bill insurance companies. The big concern
would be if I could not attract clients and my business
would fail. If that happened, would I be able to get any of
my money back in the form of a tax cut?

The expenses I would have would be about 400 dollars start
up, plus 400 dollars of expenses (the biggest being rent)
each month the business is open. If I ran the business for
6 months (400 + 400 X 6 = 2,800.00$), would I be able to get
some of that back? Me and my wife both have full time jobs
and make about 78,000 combined, no children.
As you describe it, presumably you would be a self-employed
person filing a Sch C within your 1040. If so, you would
deduct your costs (rent and other current expenses) in
period you paid for them (if you elect cash basis
accounting) or in period you incurred them (if you elect
accrual basis accounting.) So if you incurred $2,800 total
expenses and -0- income, it is likely the $2,800 loss would
offset your other taxable income since a Sch C "nets" to
Adjusted Gross Income. So if you are in a 15% federal
bracket, you would pay $420 less federal tax than if your
loss were -0-. In addition, depending on your state, there
could be a similar state tax savings. Realize you would
still have a net loss, economically, after taxes mitigated a
portion of your costs.

Gene
 

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