It is a well-known fact that most businesses lose money the first five years of existence. So you have a little leeway when it comes to reporting losses in your business when you first start out. But you want to be very careful about reporting losses for five consecutive years in your business. Why? Because the IRS could consider your business to be a hobby, thereby rejecting all of your expenses and deductions. I recommend that you might even forgo taking some legitimate expenses you can claim so that you show a small profit, even if it is only a couple of hundred dollars. This should keep the IRS from red flagging your returns due to constant losses being reported on your returns. I hope this helps you out.