If you have a business, it doesn’t need to show a profit - you just have to have a business and put money in it. From the IRS perspective, you write off those losses. If you have a dog poop scooping business, and you “attempt” to make money, that’s all that matters. Tour phone you use to make calls, your internet where you attempt to schedule business, your office in your house - all can be written off. Say it costs you $10k in bills per year, those are all business losses, and offset the taxes you pay It’s very rudimentary and oversimplified, and you should talk with an actual accountant before attempting it, but the long and short of it is business are taxed on profits. If you have more losses than profits, you’re not taxed. $100k day job -$30k because of income tax -$10k in side business losses and expenses +$10k in tax refund.