taxes and beekeeping

<< < (2/7) > >>

Joe D:
Check with IRS FEDs and State, some will classify it as a hobby until you make so much money.  So can't claim losses while getting started.  I used to raise, train and sell registered Coonhounds. That's what they told me the first years when I was getting started.  With kennels, runs, dogs and vet bills, so I figured if I can't claim loss to start with why should I claim a profit latter.
When I sell the little amount of honey that I do sell the money goes back into upkeep anyway.


Michael Bush:
If you sell anything it's income.  If you have expenses to put against those sales you will decrease your income... if you take a loss to many times the IRS starts insisting it's a hobby...

With the IRS you have to declare income even if it is only a single jar of honey. You can declare as a business or a hobby, but you better be able to prove intent to turn a profit if you declare as a business.

For example: if you spend $600.00 on two hives and sell 4.00 worth of honey and declare as a business you can deduct the cost of the hives and show a net loss. On the other hand if you declare as a hobby you pay taxes on the $4.00 and the $600.00 doesn't change that liability.

If you declare as a business with the same hives and don't have advertising expenses, separate checking accounts etc... they can accuse you of wrongfully filing as a business and then there are penalties. With two hives it is doubtful that they would see you as a business. So to be safe I would declare as a hobby, in which case the hives usually are not deductible.

You are supposed to  claim the money as hobby income you can claim the expenses to lower the income back down to $0. So there is no taxable income but, you can't claim a loss on hobby income. If its a business you can claim a loss for the first few years. That's the way I understand it.

First, talk to your accountant.  If you don't have one, ask around and find one that you can pay a small consultation fee to for advice.  You need specifics not only for your state, but maybe for your city if you live within city boundaries.  Your accountant may recommend sole propriatorship, LLC, or maybe even just using a Form-F.

Keep all the expenses and income for this activity separate from your household stuff.  Any muddling will nullify your ability to provide proof that you're trying to build a business.

As for farmer's markets, be sure to check into that very carefully.  I know our markets here charge a high fee for booth space, making it too costly for the small beekeeper.  Also, some markets even have expanded requirements for the facilities you should be using to make your products, regardless of local farm produce regulations.  This, too, may add to your costs.  Word of mouth is great...and free!


[0] Message Index

[#] Next page

[*] Previous page

Go to full version