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Returning Member
posted Oct 30, 2019 8:04:27 PM

If I began preparing a home business in 2018 but only have expenses and no income, should I file as self-employed for 2018?

In 2018 I registered as a sole proprietor and began buying materials, equipment, etc. to set up my business. Preparations took longer than I expected so I wasn't able to open before 2018 ended. I will be opening in 2019 instead.

Because of this I'm uncertain if I must report myself as self-employed on my 2018 return (zero income but with business expenses to "deduct") or if everything I've done so far doesn't apply until the 2019 return (after I'm actually "doing business").

The answer to this will obviously dictate which version of TurboTax I'll need for my 2018 return. 🙂

Thanks!

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1 Best answer
Moderator
Oct 30, 2019 8:04:29 PM

You can claim business expenses when you haven’t yet started earning income, providing that you are actually generating those expenses to earn income. The expenses must be reasonable, and you must have receipts & logs to back up the amounts you claim (should the CRA ask). It also helps if you have other documentation to show that your business is real. A business plan, advertising you had printed up, etc. - things that show that you are genuinely going into business, even if you haven't earned anything yet. 

An article on  When Can I Claim Business Expenses?: https://turbotax.intuit.ca/tips/when-can-i-claim-business-expenses-1213

An article on Deductible Business Start-Up Costs: https://turbotax.intuit.ca/tips/deductible-business-start-up-costs-6184



1 Replies
Moderator
Oct 30, 2019 8:04:29 PM

You can claim business expenses when you haven’t yet started earning income, providing that you are actually generating those expenses to earn income. The expenses must be reasonable, and you must have receipts & logs to back up the amounts you claim (should the CRA ask). It also helps if you have other documentation to show that your business is real. A business plan, advertising you had printed up, etc. - things that show that you are genuinely going into business, even if you haven't earned anything yet. 

An article on  When Can I Claim Business Expenses?: https://turbotax.intuit.ca/tips/when-can-i-claim-business-expenses-1213

An article on Deductible Business Start-Up Costs: https://turbotax.intuit.ca/tips/deductible-business-start-up-costs-6184