Tax Code Questions for an Apparel Business

If I own an apparel business, can I use tax code 162(a) to write off the cost of materials (hats, hoodies, shirts, thread, ink), as well as travel costs between office locations and equipment purchased for the business? Someone also suggested writing off phone bills, WiFi, computer use, and anything else used for the business.

From what I understand, this should be allowed under tax code 162(a), but I’ve also read about Section 179, which seems to say that any business equipment purchased or leased can be fully written off. Can someone clarify this and maybe suggest more ways to use the tax system to benefit my business?

For background: I have an LLC and started an apparel business this year, self-funded. I’ll be getting an office/workspace soon and another embroidery machine. Basically, like Cardone says, the goal is to reduce taxable income by writing off business expenses so I can reinvest in the business.

This is both a specific and vague question.

Yes, you can write off business expenses under various tax codes.

Hire an accountant (their fees are deductible, too!).

Sidney said:
This is both a specific and vague question.

Yes, you can write off business expenses under various tax codes.

Hire an accountant (their fees are deductible, too!).

I’m considering getting a CPA and doing some research on that as well.

You can write off business expenses, but your inventory (hats, shirts, etc.) has to be recorded and deducted against sales for the year it’s sold. Capital equipment can either be depreciated or written off under Sec 179.

For “mixed” expenses (partly business, partly personal), document everything carefully. Car use for business is another example where record-keeping matters. If you’re not sure about audit-proofing your books, a CPA can help, and their fees are tax-deductible.

If you’re unsure about these basics, professional help can make your business run smoother and may save you more in taxes than you’d spend on their services.

@Neo
OP might be eligible to expense the inventory right away under the small business exemption in Sec 471.

@Neo
Finally, an answer that’s accurate!

@Neo
So you’re saying I can deduct the unsold inventory by the end of the year? And for equipment, Sec 179 should allow a full write-off.

I’ve mostly been working from home or a print shop, but I’m getting an office space soon and doing more of the work myself. That’s why I’m curious about writing off things like phone, computer, WiFi, rent, electricity, and gas for travel.

Please hire a professional.

Asher said:
Please hire a professional.

I’m planning on it but wanted to get some other opinions on the tax codes based on my understanding.

To make the tax system work best for your business, you’ll need a CPA. They know how to optimize your taxes while you focus on sales, costs, and profits.

Cory said:
To make the tax system work best for your business, you’ll need a CPA. They know how to optimize your taxes while you focus on sales, costs, and profits.

I’ve looked into a CPA, but before I pay for one, I wanted to see if I could learn more from others beyond my own research on the IRS website.

@Ashby
If your own research didn’t cover basic ‘business expenses,’ you should hire someone. Here’s a link to IRS resources: Small Businesses Self-Employed | Internal Revenue Service

What kind of equipment does an apparel business use? You can expense anything ordinary and necessary for the business. Some purchases need to be capitalized, but Sec 179 may allow an upfront deduction—it depends.

@Lex
Embroidery machines and screen printing/DTF machines.

Ashby said:
@Lex
Embroidery machines and screen printing/DTF machines.

Then yes, those are deductible business expenses.