For the last year or so I have been helping as a financial partner to a small business. The person has used the money for business as well as personal expenses and I'm wondering what I need to do to accurately record that for next year's taxes. I did this before and after the person went and got a formal business license. Is it possible to include expense from the period before the business was created?
As a loan, it is not reported on your taxes when you make the loan. If/when it is repaid, you need to report the interest as income. If it is repaid without interest, you may still need to report some of the amount as “imputed interest” (which you should read about).
If it is less than $15,000 (per year), you could treat it as a gift, with no need to report it. If it is above that amount, you could still treat it as a gift, but you would need to report it, and the amount above $15,000 would be taken out of your lifetime gift exemption (currently $5.6 million).