If I reinvest all my earnings into more supplies, do I still owe taxes on it?
Taxes are based on profit after deductible expenses, not on how much cash you reinvest.
The Narrative
The Empathy
It feels unfair to owe taxes when all your money went back into supplies. You want to know how profit is really calculated.
The Education
Taxable income is your revenue minus deductible expenses. Reinvesting in supplies often counts as an expense, which reduces profit. However, timing matters—some expenses are deducted when inventory is sold, not when it is purchased.
The Solution
Track inventory costs and expenses carefully so deductions are accurate. Work with a tax professional if you carry significant inventory. Clear records help ensure you only pay tax on true profit.
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