If the business doesn't have enough income, can you carry forward the unused Section 179 amounts to future years? Or do you lose that deduction completely?

Great question! You don't lose the deduction - any disallowed Section 179 deduction can be carried forward indefinitely until you can use it. So if your business doesn't have enough income this year, you can deduct it in future years when your income is higher. As for state treatment, it varies widely. In my state (California), they have a much lower Section 179 limit than federal and require the rest to be depreciated normally. Always check your specific state rules or talk to a local tax professional.

This is great advice! How do you decide which assets to use Section 179 on vs regular depreciation? Is there a rule of thumb?

I don't have a strict rule of thumb, but here's how I approach it now: For smaller purchases (under $10,000), I'll usually take Section 179 for the immediate benefit. For larger purchases, I look at my income projections for the next few years. If I expect my income to increase significantly or if I'm currently in a lower tax bracket than I expect to be in future years, I'll use regular depreciation. This spreads the tax benefit out to years when each dollar of deduction will save me more in taxes. It's also worth considering your cash flow needs. If you need tax savings now to reinvest in your business, Section 179 might make sense even if it's not mathematically optimal long-term. Tax planning is as much about your business strategy as it is about the technical details!

I used Google Sheets for my first year in business and it was fine, but I only had about 10-15 transactions per month. I created columns for date, vendor, amount, category, and notes. Then had another sheet that totaled each category for tax purposes. Worked okay, but got tedious to maintain as I grew.

Isn't that risky though? I heard that family businesses get extra scrutiny from tax authorities. How do you document everything properly to avoid problems?

It's not risky if done properly. The key is treating family exactly like any other employee or contractor. We maintain detailed job descriptions, contracts, time tracking, and regular payments based on market rates for the work performed. Documentation is crucial - we keep records of work produced, emails about projects, and regular performance reviews. My spouse handles all our marketing and social media with measurable deliverables, while my son manages our e-commerce fulfillment with clear metrics. Having tangible outputs makes it much easier to justify in case of questions.

You need to be careful with this approach. Your corporation may be taxed based on where management decisions are made, not just where you're incorporated. If you're physically living and working in BC but incorporated in Alberta, you could face complications with provincial tax authorities.

How do you figure out how much to pay each quarter? Is there a calculator or something?

You can use the worksheet in Form 1040-ES to estimate your payments. Basically, you'll need to estimate your total tax liability for the year and divide by 4. If your income is fairly consistent each quarter, equal payments work fine. If it varies a lot, you can use the "annualized income" method (Form 2210) to vary your payments.

Exactly! The LLC question is completely separate from tax deductions. An LLC can elect different tax treatments, but having/not having one doesn't affect your ability to deduct business expenses.

That's a great point I hadn't considered! So if I keep my current state as my official residence while traveling, I'd still potentially need to file state taxes even if I'm not physically there or earning income there? Do you know if there's a minimum income threshold for state taxes similar to federal?

Yes, exactly - if you maintain your legal residency in a state with income tax, you generally need to file there regardless of where you physically are during the year. It's based on legal domicile, not physical presence. State filing thresholds vary widely. Some states require you to file if you're required to file federal taxes, regardless of the amount. Others have their own thresholds that may be lower than federal ones. For example, California requires filing for single people who earned as little as $20,000 in 2024. I'd definitely check your specific state's requirements. When I was planning my year off, I found that calling the state tax department directly was the most reliable way to get accurate information for my situation.

I heard you need to report to the VA if you're out of the country for more than 30 days though? Something about benefits verification. Is that true?