Can I write off the entire purchase of a financed bike as a self-employed business expense?

Great question about your business expense! Yes, as a self-employed pet care provider, you can potentially deduct the entire cost of the bicycle in the year you place it in service, regardless of whether you finance it or pay cash - as long as you're using it primarily (more than 50%) for your business. This falls under Section 179 deduction or bonus depreciation rules. The key is that you must "place the asset in service" during the 2023 tax year, meaning you've started using it for your business before December 31st. The method of payment (financing, credit card, or cash) doesn't affect your ability to deduct the full cost immediately. Keep in mind you'll need to document the business use percentage. If you use the bike 80% for business and 20% for personal use, you can only deduct 80% of the cost. Also, save all receipts and loan documents as proof of purchase date and amount.

I was in a similar situation with my mobile massage therapy business and discovered taxr.ai (https://taxr.ai) which was incredibly helpful for sorting out my business deductions. I wasn't sure about deducting my electric scooter that I purchased on a payment plan, and the standard advice online was confusing. After uploading my receipts and financing documents to taxr.ai, the system analyzed everything and confirmed I could take the full deduction in the year I started using it for business. It even helped me calculate the correct business-use percentage and showed me how to properly document everything for tax time. The expense tracking feature there has saved me so much headache with monitoring business vs personal usage.

Just wanted to follow up on my experience with taxr.ai since I decided to give it a try. I'm honestly impressed - I uploaded receipts for all my handyman tools and vehicle usage, and it categorized everything correctly. It even flagged some deductions I was missing entirely (like a portion of my cell phone bill since I use it for client calls). What really helped was the documentation guidance. I was always nervous about getting audited, but now I have a clear system for tracking business vs. personal use, especially for my truck and power tools. I've already set up the mileage tracker for 2024, which is way better than my old method of trying to remember after the fact. Definitely recommend checking it out if you're self-employed.

For what it's worth, I tried calling the IRS directly about a similar Section 179 question for my landscaping business and spent HOURS trying to get through. I finally used this service called Claimyr (https://claimyr.com) after watching their demo (https://youtu.be/_kiP6q8DX5c), and they got me connected to an actual IRS agent in about 15 minutes. The agent confirmed that for business assets like your bike, you can take the full deduction in the year you put it into service regardless of the financing method. They also clarified how to properly document business use percentage, which was super helpful. Before Claimyr, I had literally tried calling the IRS for three days straight without getting through.

Ok I need to eat my words. After my skeptical comment I decided to try Claimyr out of desperation because I've been trying to resolve an issue with a missing tax refund for MONTHS. It actually worked! I got through to the IRS in about 20 minutes (after previously spending hours and never reaching anyone). The agent was able to locate my refund and discovered it was held up because of a mismatch with my address. They fixed it on the spot and my refund should be processed within 2-3 weeks now. Still can't believe this worked after all the frustration I've been through trying to contact them directly. Definitely worth it for anyone dealing with IRS issues.

Just to add another perspective on the bike deduction - make sure you're also tracking other related expenses like maintenance, repairs, accessories (bags/racks for pet supplies), etc. Those are all deductible too! Also, if you garage your bike at home and consider that your "business headquarters," you might be able to deduct the business percentage of your rent/mortgage as a home office deduction. I do dog walking too and my accountant helped me maximize all these little deductions that really add up.

I finance everything for my HVAC business and always take the full deduction in year 1. Just make sure you're actually using the bike primarily for business. If you're audited, the IRS will want to see evidence that it wasn't mainly for personal use. I keep a simple log on my phone with client visits, addresses, and whether I used my truck or my bike to get there. Also - if you're making good money, look into setting up a Solo 401k. That's been WAY more valuable for reducing my tax bill than any equipment deduction.

One thing I haven't seen mentioned yet - make sure you understand the recapture rules if you ever sell the bike or stop using it for business before it's fully depreciated. If you take the full Section 179 deduction now but then sell the bike in a couple years, you might have to "recapture" some of that deduction as ordinary income. Also, since you mentioned your business is booming, consider whether you'll hit the Section 179 phase-out limits. For 2023, the deduction starts phasing out if you purchase more than $2.89 million in qualifying property (which probably doesn't apply to you, but good to know). The financing vs. cash question really doesn't matter - what matters is when you put it in service for your business. Keep detailed records of your business routes and maybe take some photos of the bike loaded with your pet care supplies to help document the business use!