This is really helpful information! I'm also a small business owner and have been hesitant about claiming advertising expenses because I wasn't sure what counts. One thing I'd add - make sure to separate personal vs business advertising clearly. I learned this the hard way when I posted about my business on my personal social media accounts and boosted those posts. My accountant explained that if the advertising is done through personal accounts or mixed with personal content, it becomes much harder to justify as a pure business expense. Also, @Connor Murphy, since you mentioned you're still learning about business deductions - don't forget about things like business insurance, professional development courses, industry publications, and even business-related travel. These can add up to significant deductions beyond just advertising!

@Connor Murphy, you're getting great advice here! I wanted to add something that might save you some headaches down the road - make sure you're tracking not just the amounts you spend, but also the results from your advertising efforts. The IRS doesn't require this for deduction purposes, but if you ever get audited, being able to show that your $13k in advertising actually generated measurable business results (increased sales, new customers, etc.) makes it much easier to justify the expenses as "ordinary and necessary" for your business. I keep a simple spreadsheet tracking each campaign's cost vs. the revenue it brought in. For your newspaper ads, you could track how many customers mention seeing the ad. For Facebook/Instagram, the platforms already give you detailed analytics on reach and engagement. Also, since you mentioned you're still learning - don't forget that the cost of tools you use to create or manage your advertising can also be deductible. Things like Canva Pro subscriptions, scheduling tools for social media, or even a portion of your internet bill if you're doing significant online advertising work from home. The key is just keeping good records of everything. Sounds like you're already on the right track with ramping up your marketing - that investment in growing your business is exactly what these deductions are designed to support!

Has anyone had experience with the deferred salary situation specifically? I had something similar happen where I took stock instead of salary, and when the company went under, the IRS initially questioned my write-off. I had to fight to prove it wasn't just a capital loss.

One thing to keep in mind with your angel investment is that you might also want to look into whether it qualifies as Qualified Small Business Stock (QSBS) under Section 1202. Even though the investment became worthless, if it was QSBS when you acquired it, you could potentially get better tax treatment on any gains from other QSBS investments by increasing your exclusion amount. Also, regarding your $22,000 in unrealized stock losses - if you're planning to hold onto those stocks long-term, consider whether tax-loss harvesting makes sense. You could sell the losing positions before year-end to realize the losses, then use them to offset any capital gains plus up to $3,000 against ordinary income. Just be careful about the wash-sale rule if you want to buy back similar positions within 30 days. The timing advice from Amara is spot-on. Since you're already planning to work with a CPA, make sure to gather all your documentation now - startup dissolution papers, final investor communications, employment agreements showing the salary deferral arrangement, etc. Having everything organized will make your CPA consultation much more productive and potentially save you money on their fees.

I'm confused about something - my understanding is that your employer can set whatever reimbursement policies they want, even terrible ones? Is this really a legal issue or just a bad company policy?

This is a clear case of the company shifting their business expenses to employees through poor policy design. I've seen this exact scenario play out at multiple organizations, and it's definitely not something employees should have to absorb. The 60-day IRS rule exists specifically to prevent abuse of accountable plans, but it assumes employees have reasonable control over submission timing. When company policies make compliance impossible, the employer bears responsibility for the tax consequences. A few additional points that might help your case: 1. **Documentation is key** - Keep records showing when you completed your expense reports vs. when you were finally allowed to submit them. Email trails showing approval delays are especially valuable. 2. **Collective action works** - Companies often ignore individual complaints but take notice when multiple employees raise the same issue together. 3. **Know your state laws** - Many states have stronger employee protection laws than federal requirements. Some states explicitly require employers to reimburse ALL costs associated with business expenses, including tax implications. 4. **Consider the broader pattern** - If this is happening regularly, it suggests the company knows their process is broken but chooses not to fix it because employees absorb the cost. The "wait until tax season" advice from management is particularly problematic because it shows they don't understand (or are pretending not to understand) that these are now legitimate tax obligations, not overpayments to be refunded. Your tax advisor's recommendation for a gross-up is the standard industry solution. Any competent corporate tax department should know this.

When I started my online business last year, I tried using TurboSelf-Employed and it was actually pretty straightforward for a simple sole proprietorship. It walked me through all the Schedule C stuff and helped identify deductions. Do you have any business software you're planning to use for tracking expenses?

Hey Chloe! Congrats on starting your business - custom sneaker painting sounds awesome! Since you're 17, there are a few teen-specific things to keep in mind beyond what others have mentioned. First, you'll definitely want to keep meticulous records from day one. Even simple phone notes about every expense (paint, brushes, shipping materials, etc.) will save you headaches later. One thing I learned the hard way - if you're selling online across state lines, research sales tax nexus rules. Some states require you to collect sales tax even as a small business, and the thresholds vary wildly. Also, consider opening a separate business checking account even if you don't get an EIN right away. It makes tracking so much easier and shows the IRS you're treating this as a real business, not a hobby. Some banks have teen business accounts that your parents might need to co-sign for. The quarterly estimated tax thing can be tricky to predict in your first year since you don't know how much you'll make. Start setting aside about 25-30% of your profits in a separate savings account for taxes - better to have too much saved than scramble to pay later!

Just went through something very similar! My employer accidentally reported my income twice when they switched from ADP to a new payroll system mid-year. The IRS sent me a bill for an extra $8,300 in taxes I didn't owe. Here's what worked for me: I immediately called the number on the IRS notice and explained the situation. They put a temporary hold on collections while I gathered documentation. Then I sent a detailed letter with copies of ALL my pay stubs for that year, my W-2, and a letter from HR explaining the payroll system error. The key is being very organized and clear in your response. I created a simple spreadsheet showing my actual pay period by period versus what was reported. The IRS resolved it in about 6 weeks once they had everything. Since your HR is already on it and preparing documentation for multiple employees, you're in a great position. Just make sure to respond by the deadline on your notice even if HR hasn't finished their letter yet - you can always send additional documentation later!

I'm so glad your HR department is helping with this! That kind of payroll system error is actually more common than people realize, especially during transitions between providers. It sounds like you're in good hands with them preparing documentation for all affected employees. One thing I'd add to what others have mentioned - when you do send your response to the IRS, include a cover letter that clearly states "RESPONSE TO NOTICE CP22A" at the top and references your notice date and the specific dollar amount in question ($12,654). This helps ensure your response gets properly matched to your case in their system. Also, keep copies of EVERYTHING you send to the IRS and send it certified mail with return receipt. The IRS processes millions of pieces of mail, and having proof of delivery can be crucial if they claim they never received your documentation. The fact that multiple employees were affected actually works in your favor - it shows this was clearly a systematic error rather than anything questionable on your part. Your case should be pretty straightforward to resolve once they have all the documentation!