Quote:
Originally Posted by Ladyhawk  If your business does not show a profit for 3 out of 5 years in existance than it is considered a hobby. Writing off part of your home as an expense can red flag the IRS and if you sell your home it must be taken into consideration at that time. |
Per IRS rules, in order to write off a portion of your home and those related expenses..electricity, phone, etc.you must have an actual home "office" devoted entirely to your business and not used for any other purpose.
If you're considering using the expenses on your taxes, you'll also need to claim the income. Be aware you will be expected to pay your fica and medicare taxes on the income. Sales tax would not be considered an expense to write off....you didn't pay this, your buyer did and you just collected the money. Form schedule C is the tax form used for unincorporated businesses. You could considered yourself a sole proprietor. You may wish to apply for a federal tax id number.
Btw, I'm not sure you can depreciate an animal....meaning the cost of a animal purchased for breeding purposes is written off a little every year.
And as noted above....home businesses are highly scrutinized by the IRS.