closing a small business

[grateful]

about three years ago my wife and i had an idea for a small business. we took classes, went through the trademark process (never completed), had prototypes made, established a domain name and web site, got business licenses and participated in several fairs to try to sell our goods. it did'nt pan out. we took about $6000 in deductions on our tax return over the time we were seriously persuing it. we never made any sales.
now we have about $3000 in inventory and another $1000 in ancillary equipment.
i can't figure out how to close the business out. if we give the merchandise away it will be a charitible contribution for which i will get another deduction. we can't sell the stuff as there is no market. i tried ebay without luck. each year i input the value of the inventory at the same as it was the prior year showing no activity.
how can i bring this thing to a conclusion? i don't want to have to go back and amend my prior tax returns. should i just stop reporting it? any advice would be appreciated.
jschwell

 

[farmerEd]

If you can't sell the inventory, and there is no market for it, then it really doesn't have a value of $3000, it has a value of $0. I'd at least change the amount of inventory you are reporting on your returns, and then when you do end up closing the business you won't have any assets to disperse.

If this is just a schedule-C, I'd zero out the assets/inventory on the next tax return and then the year after that just stop filing the schedule C. As long as you don't actually owe any taxes for the business its not like you can get charged with tax evasion...and I suspect no one will ever ask.

If you are a corp, the process will be a bit more complicated, i.e. filing a final return and officially closing the business - talk to a CPA.

 

[vvsonikvv]

You really feel your business has come to a close? Just bad timing or perhaps not as good of an idea?

What if it was execution? Since you're all over bringing it to a end, perhaps you may want to throw the idea out on this board and we can help you get it back to where it needs to be. To generate your cashflow to fund your ER.

I love hearing great ideas and I always have great ideas to execute and implement. You'd be surprised how many great ideas are executed poorly and fail, while some not so great ideas are executed flawlessly and succeed.

or maybe PM me if you dont want to disclose to all, if you want to give it another shot.

 

[retire@40]

Or possibly sell the business to someone else would could mold it to a different business model and make it successful.

What product were you trying to sell?

 

[grateful]

thanks for the replies

farmered hit hit the nail on the head-no sales = no value. thanks for stating the obvious that i just couldn't see. btw, the business was selling t-shirts and/or tote bags imprinted with a logo urging parents to read to their kids packaged together with read aloud books. the business was called "daddy read to me". see a sample attached.
thanks, grateful

 

[retire@40]

That shirt makes it sound like the child has to [-]beg[/-] ask the parent to read to him or her.

How about a shirt that says "Daddy reads to me."

 

[grateful]

reply to retire@40

it's interesting you see it that way. our intent was for the child to be assertive. however, when we tried to translate it into spanish the people we consulted said that there really is no literal translation as a spanish child would never demand their parent to do anything. it's not in their culture. the closest we could come was "daddy, please read to me!".
grateful

 

[vvsonikvv]

What part of that business were you involved in? Don't give up entirely yet. Shift your perspective on that...

So you've made some contacts in the screen printing industry? You have industry knowledge of materials, costs of labor. You know all the key companies and have an understanding of costs of distributing, marketing...

Why not expand into traditional screen printing? Start connecting with a local book store. Work with the local library. Maybe they'll be interested in your business. Find out how the contracting works with the local government (to do business with the library). See if they have any drives. Work with the schools and school districts. With the fundraising activities...

Dont let the hard work go to waste... Do an analysis to see if it's worth it for any of these endeavors.. Not saying keep throwing money at a sinking ship, but you learn alot and gain a lot from any experience. Success or failure.