Question

How do I track partial use of auto and phone for a business?

I'm still trying to figure this out. Last year I bought a really nice camera a Canon 60D because I wanted to get better photos. I did a couple portraits for people just to do them a favour but learned my lesson well when they jumped all over me because it was taking too long to get their prints back and they barked about the cost. They only thing they had to pay was exactly my cost for the professional lab, I didn't make a dime of profit, but one lady wanted a 16x20 two 10x14's about a dozen 5x7's and 200 wallet. Then she wanted custom framing, a special album, graduation cards and a slug of other stuff I won't mention. My cost on all this was over $600, that's what I had to pay. I wasn't really looking to start a business, just do a favour for someone and I had to deal with the toughest customer on the planet!

I decided if anyone wanted anything after that I needed to charge them, so I came up with a price sheet and put a markup on everything plus I started charging a sitting fee and for a photo CD. The place I have do my taxes said because I started charging I have to keep track of all my sales and pay self-employment income tax on it. Last year I turned in an income of $1,500. They still weren't happy because I didn't turn in any expenses, I only reported the income. My dad said it didn't look right because I didn't keep track of any expenses. The biggest problem is, if you get one paying customer, you're screwed because now you're a business and you have to see how many more you can get.

I have a full-time job, so I'm not at all concerned with how little it makes, I just expect to be compensated for my time when someone expects me to go out of my way for them. First, they told me to deduct mileage, but I'm not sure how to go about it. I drive about 15,000 miles per year but only maybe 300 of those miles are for my photography. Also last week I was supposed to meet with a model 150 miles from here, she wanted photos at a specific location, but when I got there, she called to cancel, can I still deduct those miles? I had a friend along who was going to help, we decided to do some shopping because a major town was close by, stopped at a favourite place to eat and went home. I didn't think I could so I scratched off my miles since it would look kind of fishy to have thousands of miles deducted for the 20 paying customers recorded. Then they said I needed to track all my miles regardless of the purpose and make a notation of the purpose of the miles....they're kidding right? So I have to write down 35,000 miles, going to store 35,025 arrived at store 35,050 arrived back home? Could I just do 35,000 miles leaving home personal? I can estimate that I drove 16 miles for one person so far this year but I'm not certain of any other miles, can I still deduct it? I've had several other customers, but they didn't require driving.

We've also been kicking around about the phone. I went an got a prepaid cell phone to receive calls on. It's in my personal name, but I didn't want to put my home phone on business cards and such so I wanted a separate phone number. I get maybe one or two calls on it per week, sometimes I don't get any calls. I was told to just deduct the part that was used for business, how would I do that? Let's say I have 1,200 minutes per month and it's use it or loose it and I've only used 200 of those minutes, would it hurt to use the remainder up for personal? I'm paying for the phone anyhow. I'll never use text and rarely use data for the business, but it's included in the bundle and I pay for it anyhow. Would it look fishy if I tried to deduct $12 per month for a business line? I can get a basic flip and put it on a $12 monthly plan with 250 minutes which might be all I need.

Is it really necessary to claim these deductions? It seems like it's more trouble than it's worth.

1 year ago - 3 answers

Best Answer

Chosen by Asker

There is only one way.
Itemize your deductions

1 year ago

Other Answers

The answer is simple, you shouldn't be in business. If people come to you and want photos, tell them you don't do portraits but you can refer them to a professional photographer. What I've found, if you charge just a little, you get screwed in the end because you end up with 30 clients and $200 income to report for the year. If you charge what you should, then you darn well better be a professional and serious about doing a business. In between doesn't work either.

by Jessica - 1 year ago

Usually, people ask questions first and then see an accountant. It appears that you've already seen one and been told you what you have to do. If you're here to whine, I sympathize. It is a pain.

by sb0801 - 1 year ago