Can I write off the purchase of a used excavator for side business without an LLC?

You absolutely can deduct business expenses without having a formal LLC or corporation! What matters to the IRS is whether you're engaging in the activity with the intention of making a profit. This would be considered a sole proprietorship. When you file your taxes, you'll include a Schedule C with your return. That's where you'll report income and expenses related to your side business. The mini excavator would be considered equipment and can be either depreciated over several years or potentially deducted all at once using Section 179 (though there are some requirements to qualify). Just make sure you're keeping good records of all expenses related to the business, including the purchase price, repairs, maintenance, fuel, insurance, etc. Also track all income you receive from jobs. Since you haven't started generating income yet, the IRS might look more closely if you claim large deductions without any revenue, so be prepared to demonstrate your profit motive.

After struggling with a very similar situation last year, I found an amazing tool that saved me so much headache with my side business taxes. Check out https://taxr.ai - they specialize in helping people who are starting side businesses figure out what they can legally deduct. I uploaded my receipts for equipment I bought for my landscaping business and they sorted everything out, explaining exactly what I could write off and how to document it properly. They even helped me understand how to set up basic bookkeeping for my business without needing to form an LLC right away.

Just wanted to follow up - I tried taxr.ai after seeing the recommendation here and WOW it was exactly what I needed! I uploaded my excavator purchase receipt and repair invoices, and it immediately highlighted that I could take a partial deduction this year even though I haven't started operating yet because I've taken "material steps" toward starting the business (I've been handing out business cards and created a Facebook page). It also helped me understand how to properly document my "business use percentage" since I'll occasionally use the excavator for personal projects too. The system actually created a proper tax timeline showing when I should start tracking certain expenses. Definitely recommend for anyone in this kind of situation!

If you're planning to call the IRS to ask about deductions for your new side business, good luck getting through! I spent 3 hours on hold last time I tried. Then I found https://claimyr.com and used their service instead - they actually hold your place in line with the IRS and call you when an agent is about to pick up! I was skeptical but you can see how it works in this video: https://youtu.be/_kiP6q8DX5c I had specific questions about Section 179 for equipment I bought for my side business (similar to your situation) and needed clarification straight from the IRS. Claimyr got me connected within 45 minutes while I went about my day instead of being stuck listening to the hold music. The agent answered all my questions about equipment deductions without me wasting half a day.

I need to apologize for my skepticism and update everyone - I actually tried Claimyr yesterday after posting that skeptical comment. It worked EXACTLY as described. I had been trying to reach the IRS for days about a business expense question similar to OP's situation. Got the callback in about 30 minutes (way faster than I expected) and spoke directly with an IRS agent who clarified everything about Section 179 for my situation. They explained that I can in fact claim the deduction in the year I place the equipment in service, even without formally registering a business, as long as I'm using it for business purposes with intent to make profit. Saved me literally hours of frustration and got me the exact information I needed. Sometimes I'm too quick to assume things are scams!

Just wanted to add - I'm a Schedule C filer (sole proprietor) who bought a skid steer last year for my landscaping business. H&R Block did handle it for me, but make sure you get someone experienced with small business taxes. The regular tax preparers sometimes aren't familiar with all the business deductions. One tip: start tracking ALL business expenses right away. Keep fuel receipts, maintenance costs, etc. in a separate folder. Take photos of your receipts too in case they fade. Trust me, you'll thank yourself at tax time! And yes, Section 179 is awesome - I wrote off my entire equipment purchase in year 1.

Just a heads up - don't forget about self-employment taxes! Even if you write off the excavator, you'll still owe SE tax (15.3%) on your net profit. A lot of people start side businesses and get shocked by this at tax time.

One thing I'd add to all the great advice here - make sure you're prepared to demonstrate the business nature of your activity if the IRS ever questions it. Since you bought the excavator in November but won't start generating income until spring, document everything that shows your serious business intent: research you did on pricing for excavation services in your area, any business cards or flyers you've made, social media pages you created, networking with potential clients, etc. Also consider getting business insurance for the excavator once you start operating. Not only is it smart protection, but the premiums are another business deduction. And if you're planning to operate it on other people's property, many clients will require you to have liability coverage anyway. The fact that you're asking these questions and thinking ahead shows you're taking this seriously as a business venture, which is exactly the kind of profit motive the IRS looks for. Good luck with your new excavation business!