Profit Movite

To be in business, you merely have to declare it. By declaring your business you can turn expenses into tax deductions.

Should you wish to establish business as a non corporate format, as an individual but under a trading name other than your own…its not a problem.

Here’s the magic part. Your business intends to make a profit, but your business does not have to make a profit for your expenses to be deductible. All you have to do is establish a “profit motive” Under the Inland Revenue Code, a “profit motive” is presumed if you earn any net income in any three out five business years.

It has long been established that businesses probably will not make a profit in the early years of trading. Remember that you do not have to show a profit…just a “profit motive” In one case, despite 20 years of losses, the court found a profit objective and allowed the deductions of the business losses in full for one company The case was not unusual.

The test for deduction is whether you have an actual and honest profit objective. You will greatly need a reasonable exception of profit.

The tests are the doctrine, that knowledge is merely subjective and incapable of objective proof. The factors in deciding must be that your intentions are honourable:

Furthermore, even if you are in full time employment elsewhere, that does not prevent you from having another vocation on the side.

To qualify as a deduction your expenses must be:

Ordinary and necessary, meaning reasonable and customary.

Paid or incurred during the accounting tax year.

Connected with the conduct of a trade or business.

The term “reasonable and customary” depends on your specific enterprise and the enterprise custom. The means that they are particular to trade and business.