Starting a race team , what are you guys doing for sponsors and tax purposes?

[chevy8]

I am starting to race my 16 car and I have a few great guys that are willing to sponsor me and support my efforts. They are wanting to be able to right it off on there taxes. They say I should start it as a business for tax purposes and that I could claim expenses to even it out. Anyone have some insight on this for me? What are you guys doing with claiming things for taxes, and what are you able to right off? Thanks for the help.

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[Rory]

You might be able to get away with it for a small period of time but I'm pretty sure it will be viewed as a "Hobby". If you want to to say "HEY, IRS, Over here, pay attention to me", try and write off racing on your taxes. If you already have a legit business, you can most likely write SOME of it off as Marketing but even then i would be careful. Better off getting a hold of your tax accountant, they will be better at answering your questions than anyone on RDC because they know more about you and your business.

[randy s]

You might be able to get away with it for a small period of time but I'm pretty sure it will be viewed as a "Hobby". If you want to to say "HEY, IRS, Over here, pay attention to me", try and write off racing on your taxes. If you already have a legit business, you can most likely write SOME of it off as Marketing but even then i would be careful. Better off getting a hold of your tax accountant, they will be better at answering your questions than anyone on RDC because they know more about you and your business.

what he said...unless you make it your full time occupation, you won't be able to get away with too much without raising a flag to the boys in the black suits. good luck with your race program.

[bob380sx]

You might be able to get away with it for a small period of time but I'm pretty sure it will be viewed as a "Hobby". If you want to to say "HEY, IRS, Over here, pay attention to me", try and write off racing on your taxes. If you already have a legit business, you can most likely write SOME of it off as Marketing but even then i would be careful. Better off getting a hold of your tax accountant, they will be better at answering your questions than anyone on RDC because they know more about you and your business.

I think he is say the companies giving him money want to get the right off.

[B-Dub 1020]

Got that right Rory, you can get a city business license and call your company blah blah blah marketing and off set what your advertisers give you with the cost it takes to do their advertising if you know what I mean. But after a year or two you better show a little profit and claim it. But as Rory said check with your accountant and check on a creative way to do advertising for people as a business. One thing is for sure, you will almost never have a pleasant experience with the IRS

[B-Dub 1020]

I think he is say the companies giving him money want to get the right off.

He is but for a business to have a legal tax write off they have to provide a legit business name that they spent money with ie advertising etc.

[chevy8]

What bob 380sx said, I have a couple of guys that own businesses and want to give me money to right it off on their taxes for their business. They want a W-9 from me. But in return I would have to claim said money on my taxes. If I can not right any of it off then I would be screwing my self. I am on a budget and could use this money but not if it is going to hurt me at the end of the year.

[rayrdz]

You might be able to get away with it for a small period of time but I'm pretty sure it will be viewed as a "Hobby". If you want to to say "HEY, IRS, Over here, pay attention to me", try and write off racing on your taxes. If you already have a legit business, you can most likely write SOME of it off as Marketing but even then i would be careful. Better off getting a hold of your tax accountant, they will be better at answering your questions than anyone on RDC because they know more about you and your business.

I would echo this also. The best way to raise a red flag with the IRS is to buy a boat or Race car and try to write it off. Much better to have a legit full time racing enterprise, and get it incorporated then your sponsors can market their businesses by targeting the racing community via sponsoring your race team. But first and foremost get a good CPA who specializes in this kind of stuff. Now then there is a small matter of accounting for all that income you are receiving or not.....

[bob380sx]

I’m going though all this right now. First step is a good business plan. You don’t really have to make money to be ok with the IRS but have a plan in place showing how you will make money. In fact the IRS expects new businesses to loose money the first few years. The ppl that get busted have raced for a long time for fun or as a hobby and then start the business to get a tax break. Nothing changed with their race program they just started righting stuff off. If you do it right and run it like a business, keep records like a bossiness, and have a plan in place to make a profit down the road you will be ok. If you’re just looking for a tax break to go play you’re going to get busted. Like everyone suggested go talk to someone that can help you do it the right way. And be prepared just like any business it’s a lot of work.

[Rory]

I think he is say the companies giving him money want to get the right off.

Yes Bob380sx, but he will still need to write off the money given to HIM and that will end up costing him a % of the money that he was given as sponsorship. Racing is not cheap and I can understand you trying to find a way to do it but the IRS has been at this game a long time and know the game very well. Trust me, you don't want the IRS looking into your stuff, especially if your racing. You can still get the sponsor money, just make sure you save some of it to pay for the taxes you will be charged later.