So you've started a business and the first year didn't go so well. Maybe you’ve had a loss, or maybe you had too many starting expenses.

New businesses don’t always start out smooth.

As a sole proprietor, you have to make sure that you're picking up all of those expenses on your tax return. If you have a loss from your business, you can use that loss to apply to any other income from that year or from the preceding three years, which means you can actually regain some of that tax that you could have possibly paid with your employment in years past.

It's important to make sure you have all your expenses recorded, tallied, and put on your tax return - even if you are in a loss. Those dollars are equal to the same marginal tax rate that taxable income is. 

You are going to save dollar for dollar on your tax return, whether it was this year, last year, or three years from prior to this year. You can carry those losses forward too, to a maximum of 20 years. Hopefully this never happens to you, because if it does that means you’ve been losing money for two decades and should consider starting a different business.