TAXES :-) Can we right off snakes we bought?

So you buy a 1.1 adults. You are not selling them but you are selling the babies that they are going to produce.
Can these snakes be declared as expenses for the business, like the racks, the rats, the paper..... or just because your commodity is snakes (even though you are not selling these and they are just expenses to get the commodity, you cannot right them off as expenses?

How you guys do it?

I write off everything I buy for the business including new snakes. Keep in mind that if you do set it up as a small business in your taxes and deduct everything you will get hit big time if you actually make a profit. I cleaned fish tanks for awhile and made about $10,000 profit per year with virtually no expenses. At the end of the year the IRS wanted nearly half of that so I had to be ready to fork out about five grand. And I was penalized by not paying quarterly taxes, they assume that they can gain interest on it as they go through the year so basically you are paying them the interest they missed out on (or just file quarterly taxes).

The best way to run the business is to reinvest all of the money back into the business. I worked in a chemistry lab for eight years and we took a loss every year. But the lab grew and expanded, they used all of their profit to put back into the business, I assume to avoid taxes. Plus they were a corporation with investors so it didn't really matter that much, it's slightly different.

It's kind of risky though not having a nest egg to fall back on, I think it's better to show a little profit every year and build up a nest egg for the bad years just in case. Last year I showed a loss of $22,000. Instead of paying $3,000 in taxes I got a refund of $8,000. Of course last year my wife and I both had full time jobs and paid a lot into income taxes, it wouldn't work that way if you just had the business, you would get zero return for showing a loss.

My company is called 'Chris Hardwick Reptiles' but I blanket everything into that business name, my Angus Cattle, Dogs, Ducks, Fish, Reptiles, etc... Every animal on the farm will eventually show a profit and there will come a time where my business will be large enough to stop growing it and I'll make a bunch of money on everything. Then I'll have a major tax problem LOL. At that point I'll start investing in tax deductible retirement options. And some of the big time reptile guys fly all over the world and travel to reptile shows burning up all their profit and having fun doing it! Since you save 50% in paying taxes it's like everything is 50% off (assuming it's tax deductible). I think the government sets it up that way to grow businesses and to make the economy grow in general, bigger businesses means more people will be employed.

Also keep in mind that everything resets at the end of the year. So if you take a loss this year it won't affect the profit you make next year. So if you make a ton of money in three years you'll get hit with all the taxes on that profit. It's better to spread things out over a year to even it out, if you make a lot of money invest in something else to avoid taxes. I couldn't imagine making $100,000 and having to pay the IRS $50,000 at the end of the year OUCH.

This is just a guess since I've got no experience...

If you're claiming them on your taxes you'll probably be expected to include the sales of the babies when they are sold.

Again, just a guess...

Thanks guys. And yes I would report selling babies.
So far the conclusion is that I CAN right off snakes from my income. Say I make 50K at my every day job and I bought snakes for 10K so my declared income is 40K. Correct?

This would totally be a question for an accountant, I don't trust armchair quarterback opinions (this would include myself) when dealing with the IRS....LOL.

I think Craig is leaning on the right idea, I'm sure you can write them off....but then you better be sure to include any sales. Personally, this is why I avoid classifying anything as a business and just call it a hobby. I'm pretty sure if you have a declared business for tax purposes, that falls in a completely separate boat as far as filing goes as you're subject to a different tax rate for the business.

I breed as a hobby not as a business so I don't have to worry about justifying a $1000 vet bill on a $100 snake.

My husband and I do have a small business where he does gunsmithing and custom firearm builds, as well as consignments, services like transfers, etc. If you are going to run as a small business versus a hobbyist this is what you need to do:
- Figure out if you want to run as a sole proprietor, or if you want an LLC.
- Register with the state as a business, which includes getting set up to collect and remit sales tax. Most small businesses file quarterly but if you do a large volume (think WalMart) you may have to file monthly.
- If required, register with your county. My county requires it because it collects its own taxes on businesses each year based on your balance sheet.
- Set up a GOOD system for tracking invoices and expenses. I use QuickBooks.
- Be able to prove your expenses; my business was audited three years in a row and I had a receipt for every claimed expense.
- Keep a mileage log, you'd be amazed at how much you drive each year for business.

Take tax questions to a CPA who can analyze your specific business and advise you.

I always did my own taxes until I started a business. Then I got a CPA. Money well spent, they are worth their weight in gold! A good one knows every possible legal way to save you money.

I am doing it with CPA. But he is not sure. He never had clients that have commodity produce another commodity...

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Originally Posted by qwerty53

Thanks guys. And yes I would report selling babies.
So far the conclusion is that I CAN right off snakes from my income. Say I make 50K at my every day job and I bought snakes for 10K so my declared income is 40K. Correct?

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Personal taxes and business taxes can be different or the same. It depends on how the business is set up. This might help or confuse you even more: https://ttlc.intuit.com/questions/29...ersonal-return

As others have said, the best advice is to consult an accountant who is experienced in this area.

It is not registered business. As I said just looking to reduce my main job income.