Last night, I sent in my tax returns for the first year of the business. Whew! What a long process … so much terminology to learn! Still, I have a much better sense of how to organize my records for next year (for advice on that, see my Spreadsheets for Small Business series). But you know what’s even better than getting the taxes done?
SHOWING A PROFIT! After everything was calculated and done, Baltimore Bumble Crafts showed a profit of $15 in its first year. HOORAY! HUZZAH! CHEERS! This is a BIG deal. At some point in the first three years, every business had to show a profit in order to prevent being forever and always relegated to “hobby” status. This means that if you don’t show a profit in the first three years, you cannot write off any of your expenses and everything you make shows up as income, even if you actually lost money that year doing it all. This is the worst-case scenario for any business. And now, I. Am. Safe. Forever.