Author Topic: Making pizzas as a tax shelter  (Read 3886 times)

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Offline Danes Dad

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Making pizzas as a tax shelter
« on: October 25, 2005, 02:35:18 PM »
***Disclaimer***
Please check with your tax advisor before following any tax advice.  This is not professional tax advise this is only something I saw on the web.
**************

Ok now that i've said that this is what I have learned. Making pizzas as a hobby is expensive.  I can't imagine how much some of you professionals spend on Mozzarella alone.  I dream of opening a pizza parlor some day so my ultimate goal is to become a business owner and obviously make a profit.  What most consider as a hobby I think of it as research and development.
This tax shelter idea is from MSN Money.  The link is below

http://moneycentral.msn.com/content/Taxes/Taxshelters/P33572.asp

This is not the very tired idea of taxes being unconstitutional, but a legitimate way of expensing your hobby as a business.  I have ran this by a tax "professional" who states this is legitimate, but various rules must be followed.
I have not did this yet, but plan on researching more and filing for a business name and getting necessary licenses.

I do not profess to know all tax laws and do not encourage anyone from doing this before they check with their local tax advisor.

Is anyone doing this currently?

Danes dad


Offline Snowman

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Re: Making pizzas as a tax shelter
« Reply #1 on: November 04, 2005, 03:00:25 PM »
Be very careful.  If you are running a LEGITIMATE business, then go for it.  However, if you have no business plan (to show a profit motive), then expect the IRS to get crabby.  Yes, the article states that a business won as being a business in a lawsuit with the IRS, but it didn't say how much the lawsuit part cost.

So, let's look at realistic issues. 
1.) Pizzamaking.com -- a legitimate business.  It sells ads, or should at least hope to be able to.
2.) I make pizza in my kitchen.  Nope.  First, let's say the IRS lets you get away with being a business.... now they call the health dept.  Your truckload of red tape just got delivered -- postage due. 

Interestingly enough, if your hobby has a net profit, it's automatically a business and the IRS wants their chunk. 

Offline Bill/SFNM

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Re: Making pizzas as a tax shelter
« Reply #2 on: November 04, 2005, 05:06:56 PM »
Of course you can always discuss the matter with your IRS auditor over a few slices of freshly baked pizza.  ;) ;) ;)

Offline jimd

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Re: Making pizzas as a tax shelter
« Reply #3 on: November 04, 2005, 05:50:53 PM »
This may sound pretty "crabby", maybe "crappy", but this suggestion has struck me as wrongheaded on several counts. None of like paying taxes, that is for sure. There are also credible ways to reduce or defer taxes. But with this Country's recent disasters, Iraqi war (where many of our troops have been in harms way without proper gear or armor), a lack of health care for the poor and other woes, figuring out how to make a pizza and call it a tax deduction has me shaking my head. I don't think "dreaming of owning a pizza shop" should really let someone off of paying their fair share of taxes. If it were me, I would find a cheaper hobby, buy cheaper mozzeralla or pay my taxes and give thanks for living in a country that lets us dream of opening up pizza shops. Then again, maybe I should just take a nice two week trip to Naples with my wife, visit a new pizzeria every day and claim a nice deduction to boot as I , too, "dream" of owning a little pizza shop. Let someone else fund the cost to live here.

Just my two cents.

Offline Danes Dad

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Re: Making pizzas as a tax shelter
« Reply #4 on: November 04, 2005, 09:57:46 PM »
jimd/Snowman - Very good advice that anyone thinking of doing this should consider  ;)
jimd - True, someone who is just dreaming should not dream for the sole purpose of a tax deduction.  I wish our congressmen held the same ideals as you (one less bridge in Alaska could pay for a lot of body armor).

That being said, if you are truly planning(not just dreaming) on starting a pizza business, than you better be smart about spending money.  Not claiming all your LEGITIMATE deductions is either great charity or not very business savvy, or both.

As Snowman stated if you start selling pizzas out of your house the health department will definately want to see you food retailer/food handlers permit.  Although, if your currently only making pizzas in your house as research (getting your dough/sauce recipe perfect) you will not have to pass all the health regulations as you will when you actually sell your pizza to the public.

With any new company/product there is a lot of legitimate business that occurs before your first "model" arrives on the store shelves.  So if you truly plan on starting a business and are in the beginning stages of perfecting your model don't forget about the legitimate tax deductions that are available.

jimd your "two cents" are appreciated and a good thing to consider before anyone takes any "business" deductions  :).

Danes dad

Offline jimd

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Re: Making pizzas as a tax shelter
« Reply #5 on: November 05, 2005, 07:47:55 AM »
Dane's Dad:

I really appreciate your gracious response. Having re-Read my post again this morning, it sure sounds a little too "preachy". Thanks for taking it in stride.

Offline RockyMarciano

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Re: Making pizzas as a tax shelter
« Reply #6 on: February 19, 2006, 11:46:52 AM »
I would open up an arcade or a laundromat instead, coin operated machines aren't accounted for, so that makes small time money laundering a lot easier.

Offline beckysuea

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Re: Making pizzas as a tax shelter
« Reply #7 on: February 19, 2006, 02:05:43 PM »
I have had a home based transcription service in my home since 1987.   Even though I have been legally able to, I have never claimed the home deduction.   What I receive in tax savings is not worth it because the percentage you get to write off of your home each year, you have to pay back if/when you sell your home.   So if you have a small house payment, which I do, and I live in a high resell area, which I do since I live in California, I would be losing thousands of dollars if I sold my home.   So the few hundred dollars I would save on my taxes each year is not worth it.


Offline Perk

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Re: Making pizzas as a tax shelter
« Reply #8 on: February 20, 2006, 10:01:33 AM »
I was once a business owner, did everything by the IRS book, 1 time I paid 1000 dollars more then I needed too on one tax then fell short 53 dollars on another tax that same month. Of Course the IRS fined me for being short 53 dollars and kept my 1000 over payment with out a refund.  I now make more money working for a corporation then I did my own business because I didn't know the real world rules of running a business.  I plan on getting a side business to supplement my income now, and when I do it will be different.
You need to milk every penny out of the business, If you don't, you will NEVER be successful!!

Now what this guy mentions on money central, You can take it this way, don't go in the food service business,
you have to get food permitts
Use the food you buy as dinning expenses as long as you have 2 people you are entertaining for business purposes.

Buy your ingredients: 50# of flour, 10 gallons of sauce, 20# of cheese whatever, because you want to entertain lots of potential customers for a product (non food)

Invite two friends over, talk to them about buying swamp land.
Bummer no sale!!
But you can then write off the pizza's you made,
What about the left over ingredients? Well that's for the future investors
but wait the food must have spoiled bummer, A tax Right off yes!

To bad you really used the left over ingredients for your family pizza's for the year!!

Now, one thing you have to do is make a profit with in 3 years or your business may lose it's corporation.
So find something, make an ebay company, but buy all your food, toilet products everything you can think of
through your company.

Myself I would love to get a non profit business license,
Those type of business make the most money!! Sure no corporate profit, easy to make that happen. It's called salary bonuses!!


-Dave
Jacksonville Fl.


 

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