When You Buy Business Related Items..

[Lee]

Do you try to stagger the purchases or buy them all at one time?

What i mean by that is, say you have an idea for a new site, do you buy the content, scripts, designs, etc in one go or buy them one peice at a time, work on that part, then buy the next thing you need etc?

I have to say that as of late, ive been staggering the business purchases ive made and, it actually seems to be making me more productive during the development stages of these new projects im coming up with.

Rather than having to worry about stuff that is 'on hold' im finding myself spending more time planning whats happening and working to a specific deadline, which in turn, is making the projects come together a LOT quicker than if i had bought everything at once.

Just wondered if anyone else was staggering their business purchases or whether you buy everything at once?

Regards,

Lee

[chadknowslaw]

My business is not like yours, but I think most of the US webmasters are accounting for their purchases the same way for IRS purposes--using the cash method.

There are 2 recognized methods of reporting revenues and expenses for IRS purposes--cash or accrual. In the cash method, the year that you take money in or pay money out is the year that you record the revenue or expense. This is the most common and the preferred method for small business by the IRS. In the accrual method, you claim the expense or revenue in the year it was used.

Example--Cash LLC and Accrual LLC both have $1000 in revenues in year 2005 that they deposit in the bank. The both buy an insurance policy on December 27, 2005 that covers the 2006 calendar year for $500.

The Cash business will have $1000-$500 = $500 taxable income for year 2005. Accrual Business, since the policy is paid for in 2005 but used in 2006, will have $1000 taxable revenue in 2005 but have a $500 deduction heading into 2006.

A lot of businesses on the cash basis [like most webmasters] will make purchases at the end of the year if they need to reduce their taxable income for the current year. If they are trying to move expenses into the following year, they will put off purchases until after the new year.

So, do you need more deductions this year? Then go ahead and buy stuff now that you will use next year. If you are sitting fine for this year, maybe put off buying until after January 1.