I incorporated right away so that I could write off big chunks of my day-to-day expenses. I write off a big chunk of my rent and most of my meals that I go out to eat.
Has an accountant blessed the idea of writing off your meals? You may be setting yourself up for an audit at some point where you have to explain how exactly that meal was business related.
True. You have to track your receipts also, and it might even be a good idea to have the corporation "reimburse" you for the computer through company funds. I hear you also have to be very careful with the home office deduction, because it's a major red flag for auditors.
I'm pretty sure that sole proprietors can write off business expenses as well.
Of course, depending on what you try to write off, the IRS might be very suspicious -- but that's true for corps, too. The rules about what constitutes a "business expense" still apply to corporations.
It does make the bookkeeping easier to have a corporation, and it may affect the odds of being audited, depending on exactly what your profits and expenses are. Again, there is no cheap substitute for a real accountant's advice.
This may be a silly question, but just so I'm clear, I'm assuming that you can't write off anything from the firm until it is actually generating revenues. Is that right?
In the case of a corporation (C-Corporation or S-Corporation) business expenses are paid by the corporation and most are tax deductible on the corporation's tax return. So if a corporation has revenue no taxes are paid on the money used towards deductible business expenses. This is one of the nicest features of corporations because there are so many deductible business expenses.
