For tax reasons

[hibiscusmile]

Just thought I would post about something that comes up every now and then, and that is if you have a business and file your taxes for the business, when you purchase something that you use in the business, then that is what is called a "write off".

Meaning if I purchase an ooth off of someone, I can write the expense of that ooth off on my taxes, or if I buy feeder insect off of someone, I can do the same, so be it with containers, gas, feeder food, pictures, shipping expense (boxes, bubble wrap) and so on.

Now if I purchase any service, say like shipping off of UPS, that is also a write off, but say I buy something and the seller wants me to say it was a gift, then I cannot write off that item I purchased for my business.

That would then mean that I would personally be responsible on the taxes for that item. So if I buy $1000.00 of flies this year and said I sent the money as a gift, not a purchase, then my personal tax implication goes up by the 1000.00 dollars.

So I cannot and do not send monies as a gift unless it is a gift because in a corporation it is far better that they write off the money, than me taking it as income. Is anyone following this

I just wanted you's to know that when asking someone who has a corporation, or even a dba, it is not that they do not want to help you out, but like me, I rather pay a bit more, than end up in trouble with the guys in black and end up not making any money due to the tax implications involved with it.

 

[PhilinYuma]

This is a really good point and goes beyond taxable income/expenditure. Here are two more examples of folks asking for the "gift" (as opposed to "merchandise") option. I buy $50 of mantids from someone who says, please mark it as a gift to save me a few bucks. I do, and when something goes wrong, I have no recourse to have the deal arbitrated by PayPal.

Another problem that a friend and I run into is with import duty. Say we sell some nasty P.M. jewelry with a scrap value of $2,000 to someone in Australia. They will pay PayPal under "merchandise" to protect their investment, but they want us to mark the customs declaration as "Gift" to save themselves the import fee. Do they really think that Customs, who do this for a living, will be fooled by this?

So, if you are doing legitimate business by PayPal, use PayPal legitimately and conduct your business in a business like manner. If you are doing something else, then that is a different matter.

 

[hibiscusmile]

Thanks Phil, wasn't sure just how much to go into it all!

 

[Rick]

I've wondered if you have to claim your earnings as income. If not, I hear some places are cracking down on stuff like that. I hear they are even after internet purchases.

 

[hibiscusmile]

Anyone who does not claim any income received, even if say are just hobbiest will pay a penalty for not reporting it. They always find out, some way, some how

. A lot of your gangsters end up in prison due to the fact that they do not report their extra income, most never get convicted of the crimes they committed, but hiding funds have a way of catching you. As do fruad and things like that thru the mail, they get caught for that too. The gov does not care how they get u, just as long as they do.

One of the ways they find out is people live above their incomes, like they have this new car and on their income they can't afford it, so then where did the money for it come from? That's how they get caught.