Business loss is a state that occurs when a company fails to generate enough revenue to cover all expenses associated with the operation of the business. This disparate relationship between profit and loss often results in the ability to claim the loss as a tax deduction, although that is not always the case. Companies generally prefer to avoid business losses if at all possible, and will usually take action to eliminate or at least reduce the amount of the loss.
Along with businesses, individuals may also experience a business loss. People who choose to support themselves with freelance work may incur such a loss when their efforts do note generate enough business volume to cover all the expenses associated with offering those services. Like businesses, a freelance professional may or may not be able to claim such a loss as a deduction on a tax return, based on currently applicable tax laws.
Investors may also experience a business loss. This occurs when a stock or other type of security fails to maintain a value equal to the purchase price. If during the course of a calendar year the option price falls below the amount paid for the option initially, the investor begins to lose money on that investment. When this happens, it may be possible to use the loss to offset the gains made with other investments and thus minimize the overall tax burden.
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