What is considered a "loss" in regards to tax and small business?
I am thinking about becoming a Pampered Chef Consultant, which is technically considered my own small business. I will recieve a 1099 and I am able to deduct expenses including milage, home office expenses, ingredients, etc. I was told that I might show a "loss" for the first year or so while I am getting my business up and running.
Can you explain what this is exactly? Does this mean that I don’t pay any taxes? That I don’t make a profit? I am so confused.
Thanks for your help!
I hope I can answer this. Tax time is confusing to me so I get the names wrong. But here goes. As with any small business there is a form you fill out where you put all the receipts totals for your mileage, office supplies, etc. When you compare that total to what you made, it looks like a loss. You will make money in the PC business if you work your business meaning making those follow up calls, etc. I have been a consultant for over a year and love it. and I make money. At tax time though, I want my taxes as low as possible, so I include my phone bill. That is a necessary expense for a home business. Internet. A portion of my groceries as I try recipes at home. These are things I would be doing anyway. I would be buying groceries and feeding my family. Paying my phone, etc but now I can write it off. So even at tax time, when you deduct what I made from my "expenses" it looks like I didn’t make any money. Does that make sense?
Your only upfront costs on this PC business is going to be your kit. Depending on which kit you purchase you could make that back in your first show. I wouldn’t purchase anything else until your first commission check. You can email or call me and I’ll be happy to answer any other question or give pointers. cjmcewen@yahoo.com 501-626-5281
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I hope I can answer this. Tax time is confusing to me so I get the names wrong. But here goes. As with any small business there is a form you fill out where you put all the receipts totals for your mileage, office supplies, etc. When you compare that total to what you made, it looks like a loss. You will make money in the PC business if you work your business meaning making those follow up calls, etc. I have been a consultant for over a year and love it. and I make money. At tax time though, I want my taxes as low as possible, so I include my phone bill. That is a necessary expense for a home business. Internet. A portion of my groceries as I try recipes at home. These are things I would be doing anyway. I would be buying groceries and feeding my family. Paying my phone, etc but now I can write it off. So even at tax time, when you deduct what I made from my "expenses" it looks like I didn’t make any money. Does that make sense?
Your only upfront costs on this PC business is going to be your kit. Depending on which kit you purchase you could make that back in your first show. I wouldn’t purchase anything else until your first commission check. You can email or call me and I’ll be happy to answer any other question or give pointers. cjmcewen@yahoo.com 501-626-5281
References :
PC Consultant and LOVING it!!