I was looking for a little insight from those who have gone through this.
This past year I wanted to try my hand at starting a photography business. I still work a normal mon-fri job, and I didn't know how well or not this would take off.
Over the year I think I did pretty good, made decent money for it being part time. I also quickly learned that if this was something I wanted to really expand, I needed new and better equipment. I bought some new things with a credit card, and pretty much any money I made, I used to pay that off.
Now I'm left with how I need to do my taxes with profits and deductions. Through purchasing new equipment, I definitely spent more than I made over the year. This is just an example, but lets say I spent $9,000 on new equipment and I made $5,000 over the year. As a hobby, I could write off my equipment, up to the $5,000, right? Can I use the other $4,000 of my expenses for next year, or is it just gone? OR, could I amortize my expenses, lets say over 3 years. So I can use $3,000 in expenses this year, after making $5,000, I'd pay taxes on the difference, the $2,000. Then next year, I can use another $3,000 of my initial expenses and another $3,000 the third year.
Am I completely off in this thinking, or is it about right? I have no idea what to do and want to make sure I do it right. I've been trying to do research online, and am in search of a CPA to help as well. I just wanted to get some input here from those who started out this way.
Thanks for your time, and I'm sorry about the long post. I appreciate any info you can offer. -Wes