Started In October - Feeling Weird At Operating At A Loss

[Mrs. CC]

Working on entering my expenses and while I KNOW I have not overspent to begin this business, I am feeling weird about operating at a loss.

I know I am going to show a loss because I was only open 3 months out of this year. the IRS will take that into consideration, right?

I just bought toys today (used and at a very good price) but feel weird because I have so far spent more than I have brought in.

I know that is the definition of operating at a loss, I just feel conflicted.

Maybe I need a shrink I just don't want to get tagged by the IRS (yes they scare me) and I feel like I just need a full year to prove I know what I am doing (aka show a profit).

Thanks for letting me post this here!

[sharlan]

Tom can clarify this better for you, I'm sure, but you can show a loss for 2 years .

[Abigail]

Did you work anywhere else all year? If you did you have no worries. You can show a loss for more than a year also. I'll be opening my daycare next week (no one is lined up yet) and I've spent well over what I will make in the next two months on daycare items, but I've worked at a daycare to show a general profit this year still.

[Mrs. CC]

I did work for 5 months this year elsewhere and now I will have this from October to December. I had a baby this year and didn't work the other months due to High Risk Pregnancy and maternity leave.

I didn't even think of the other months I worked. WHEW!

I have 3 part time kids and would like one more part time kid but don't want to press my luck to much. I just keep hoping and praying one more will fall in my lap!::

[TSDaycare]

Operating at a loss is common even after the first year, once you take into consideration ALL of your expenses (all utilities,food, mileage, not to mention regular things like toys, crafts,etc.) it adds up quick. It's really hard to imagine everything that is deductible in a home daycare until you sit down and figure out all the totals. As long as it's all legit, don't worry about it, you have yourself covered. I wouldn't take less of a loss or take off deductions just so you can show a profit because you are scared of an audit.

[TomCopeland]

Showing a Loss

It's not uncommon to show a loss in the first year of business, particularly if it's only been three months. Don't worry about it. As long as you show a profit three out of every five years, there is no problem.