Unique business tax question - Can you help me?
I want to start a business at home. I want to sell t-shirts and hats. My unique selling proposition is that someone buys a hat or shirt from me and I'll donate 50% of the purchase price to a charity that relates to them. I have a full-time job in Oregon. I get a W2 each year. Last year I earned $120,000. My wife does not earn any income. We do not own a home. We have no other sources of income. My business model looks like this: I design a t-shirt or a hat. I price either item at $30. COGS = $8. As part of my sales process, I donate 50% of the $30 to a specific non-profit. $30 retail price $8 COGS $15 non-profit donation $7 profit I’ve been told that I can not write off 100% of the non-profit donation. Can I afford a 50% non-profit donation as part of my selling process and still cover the taxes and make a good living? Is there a formula I can use that will help me understand what selling 1,000 units a month looks like? 5,000 units a month? 10,000 units a month? And 20,000 units a month? Thank you for your help! Jason
