Writing off equipment...

If you purchase equipment for your business, what are the requirements for writing that equipment off? Can you not use it for personal use at all, even though you are technically refining your photography skills while doing so?, Or do you have to calculate of percent of the time you are using that equipment for business and that percent of the cost is the write-off amount?

If not, what are the other options? Leasing/renting the equipment to your business as needed?

You could do something simple like pay your business entity rent for anything you use for personal use. Just make sure it's a fair rate, i.e. what you would pay to a rental firm. Good question for your CPA.

RacingThoughts wrote in post #11007470
If you purchase equipment for your business, what are the requirements for writing that equipment off? Can you not use it for personal use at all, even though you are technically refining your photography skills while doing so?, Or do you have to calculate of percent of the time you are using that equipment for business and that percent of the cost is the write-off amount?

If not, what are the other options? Leasing/renting the equipment to your business as needed?

Are you serious? It is one thing to calculate a percentage of you house or apartment if you use the space for work. Obviously you can't use the entire space unless you live in a photography studio, but your camera usage? How would IRS ever prove you used your camera for personal use?

I have no idea, that is why I am asking in the business of photography forum. I do plan to meet with a CPA soon and will get clarification, just wanted some guidance before then.

Can't you take a depreciation on your equipment? I also wonder if you are using a computer and it is in a room that you store stuff or have an office area then part of you house payment / utilities could be written off.

Yeah talk to an accountant !!!!

First of all ... PLEASE get a CPA ... I'm an Accountant but not a CPA so I ask a CPA whenever I question any of these types of items, better safe than sorry.

There are ways to retire assets from your business by selling them at a fair market or depreciated price.

Also, there are many things that you can use as write offs such as home office space, etc. but be VERY careful when and how you go about doing that as a home office is a huge red flag for an audit.

Yeah, not planning to go the home office route as it is too mixed and we really need the space for personal use, and I've heard the same thing about it as a red flag.

What do CPAs charge? Is it mainly a consultation or do they want to handle everything from book keeping to filing your taxes?

RacingThoughts wrote in post #11007470
If you purchase equipment for your business, what are the requirements for writing that equipment off? Can you not use it for personal use at all, even though you are technically refining your photography skills while doing so?, Or do you have to calculate of percent of the time you are using that equipment for business and that percent of the cost is the write-off amount?

If not, what are the other options? Leasing/renting the equipment to your business as needed?

Funny, I was thinking the likewise. Let's say I purchased the some gear (over $2000) and it's was purchased with personal funds.
A. can I lease it to my business?
B. Then sell it to my business for depreciated value.
It can done but talk to a CPA for formal info.

CPA or IRS. Pick one.

whats to say you have 1 for pleasure 1 for business???

Mick_I wrote in post #11015450
Funny, I was thinking the likewise. Let's say I purchased the some gear (over $2000) and it's was purchased with personal funds.
A. can I lease it to my business?
B. Then sell it to my business for depreciated value.
It can done but talk to a CPA for formal info.

If you're a Sole Proprietor then your personal funds are your business funds. The IRS sees you and your business as the same entity. Keep your receipts so you can write off the expense, but it doesn't matter which checking account the money came from as long as it's your money.

OK, CPA here, First things first - consult your local CPA as there may be local laws that I am unaware of. Secondly, I DO NOT practice in the public arena and things may have changed since I did, so my basis for these statements is my knowledge of what-could-be old IRS regs (though to my knowledge, nothing has changed here).

Yes, you can depreciate equipment used in a business capacity. It would be hard to prove or disprove personal use, although I would strongly encourage you to track useage and be able to show records of usage. The principal rule of taxes is CYA!

Yes, you can deduct, and should if it is allowed, expenses related to a home office/studio. You can also deprciate any equipment used in your business - computers, software, printers and so on - and, again, you should. It is a legal and allowable expense. Not sure where you guys get that info about a home office triggering an audit, but it's not true. Audits are highly unlikely in the private sector and as long as you can back up your numbers, shouldn't be a problem.

Someone mentioned using personal funds to buy equipment. IF YOU HAVE A BUSINESS AND IT IS NOT A SOLE PROPRIETORSHIP (which it should not be - go see your CPA), you have just pierced the corporate vail. Someone sues you for some reason, first thing that attorney is going to do is check your banking for this transaction right here.

The buying then leasing thing can be done. I have not seen it done frequently, as you then create business expense and personal revenue. Same with the sale to your business, though that really doesn't make sense in my mind, as you sell an asset at a lower value to your business and basically take a loss on it personally. You can't do anything with the loss but had the business just bought, you could have expensed the entire amount via depreciation.

My hope is this provides you a little more info to think about. I strongly encourage anyone who owns a business to at least consult a CPA and, preferable use a CPA for your completing your tax work, if not handling your business finances. there's alot of security that goes with having a CPA take on some of those responabilities.