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bearmtnmartin
bearmtnmartin GRM+ Memberand SuperDork
10/7/20 7:51 p.m.

In Canada you can write off racing expenses as advertising so long as you are not driving the car. Has to be a third party.

Paul_VR6 (Forum Supporter)
Paul_VR6 (Forum Supporter) Dork
10/7/20 9:07 p.m.

There are all sorts of insane things that are legal and come recommended. Find a professional. 

Keith Tanner
Keith Tanner GRM+ Memberand MegaDork
5/23/21 6:40 p.m.

You guys know each other?

Asphalt_Gundam
Asphalt_Gundam Reader
9/26/22 9:30 a.m.

I "officially" started keeping track of my side business stuff by recommendation from my tax accountant. I was basically told WTF aren't you doing this because you CAN write of the deprecation of the tools and equipment you already own, any new tools or equipment you buy, shop supplies, fabrication materials, building maintenance, and a few other categories. The topic of "race car" his response was "You can TRY small amounts but anything that can't be easily proved as business related will be an immediate red flag and get an audit". To which I got the underlying message that its not worth it to act like you're clever, take advantage of all that you get to without question.

Just to be clear I do operate a side business out of my garage. I take in enough work that it has been 6-10K in additional income each year. The first two years I was at a loss thanks to depreciation of stuff I already owned and buying some larger/more tools. Last year was a little slower but I also didn't buy much new stuff so I think pretty much broke even. And really that's the goal for me anyway. I boost my income by doing the additional work on the side and using it to purchase the tools, materials, supplies that I use in and around the shop (some of which may or may not get used working on my own stuff) to "break even" so that I don't wind up paying significantly more taxes than I would if I wasn't doing side jobs. Bottom line it works out that I'm getting to supply and tool my shop for that extra work without putting myself into a higher tax bracket while freeing up the money I would have spent from my regular job on tools and supplies anyway. I'm a few grand in the black so far this year so I'll be shopping for new tools in the next couple months. Already eyeing up some scales since some of my regular customers have asked about corner balancing...plus I could use them!

Edit: This also keeps me protected from any random audit where it gets decided that there's absolutely no way my income is covering what I spend IF I were taking in and hiding $6K+ of income every year.

DeusNorman
DeusNorman New Reader
10/14/22 8:02 a.m.

When I started my own business, I very often turned to a website that helped small businesses for advice. I think that if you want to start your own racing business, you would do well to learn more about all the nuances of this industry, as well as have leadership skills because it helps a lot in starting a business. But as always, it's up to you.

Paul_VR6 (Forum Supporter)
Paul_VR6 (Forum Supporter) UltraDork
10/14/22 11:11 a.m.
Asphalt_Gundam said:

Edit: This also keeps me protected from any random audit where it gets decided that there's absolutely no way my income is covering what I spend IF I were taking in and hiding $6K+ of income every year.

This is a good point, if you are doing pass through income, it helps a lot that you have regular income/tax base to offset any negatives. If you are using a business loss to offset your entire tax base while working a full time job, it starts to look suspicious. I tend to end up flip flopping profit years and loss years just due to certain expense timing etc and it's been fine so far.

BA5
BA5 GRM+ Memberand Reader
10/14/22 1:26 p.m.

The real question is, why bother?  Yes, you might save some $$$'s, but for the hours you'll wind up putting into it it's not anywhere remotely worth it.

Plus you're adding book-keeping/tax work to your hobby.  Is that really how you want to spend your leisure time?

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