For Example, lets say I needed to buy fuel for $5,000 to haul wood for my business in a given year and the wood I hauled in for that year only made me $4,000. Lets assume a 25% flat business tax as to not overcomplicate this even further. Assuming i had no business related expenses, I would be charged $1,000 in taxes on the $4,000 profit. HOWEVER, I needed to buy $5,000 in fuel that year to do my job meaning I made no actual profit that year and had $1,000 loss. Since business taxes only apply to profits, I therefore didn't have to pay any business taxes to the government.