Discussion:New Company - Startup Expenses
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Revision as of 05:28, 1 February 2009; view current revision
←Older revision | Newer revision→
←Older revision | Newer revision→
Discussion Forum Index --> Tax Tips --> New Company - Startup Expenses
CPAgambler (talk|edits) said: | 4 January 2008 |
| As everyone knows a new Company cannot expense more than $5,000 (with an election) of startup expenses in the initial year. Any expenses beyond the $5,000 threshold must be amortized over a 15 year life. Therefore, a business should get out of the "startup" phase as soon as possible because 15 years is long time to wait for a deduction. One tax planning strategy... While the "brick and mortar" store is being completed, begin selling products through your website to commence the business for tax purposes. Once revenue is collected from the website, ordinary and necessary business expenses can be deducted in the current year without regard to the 5,000 limit because the Company has effectively started the business. | |
| 9 January 2008 | |
| If one is doing business through the website then ill advice them to form a Offshore company with and offshore Bank account. An offshore company starting cost is not more than US$250 and the yearly maintenance is the same. To open an offshore bank account it cost US$300, an one off payment. An offshore company has limited liability without any need for auditing, accounting or reporting.
Having an offshore company it permit you to do business worldwide. | |
| 5 December 2008 | |
| I just started my own (very) small business as a CRTP doing tax returns for people within my community. I became registered just recently in November 2008. So since I decided to turn this into a small business, I have already incurred a few expenses - some of which are considered "start-up" costs. However, I won't be generating income (transacting business) until starting Jan/Feb 2009. I know being a tax preparer myself I should be able to know the answer, but I'm a little unsure so thought I would come here for advice from more tenure individuals.
My question/concern is... as an individual/sole prop business I use the cash method. So, are my 2008 business expenses claimed on my 2008 tax return? Or can they be claimed on my 2009 tax return since I won't be transacting business until 2009? Advice or direction with links would be VERY much appreciated! Thanks in advance! ~Maria | |
| December 27, 2008 | |
| Maria -- If you have business expenses in 2008, even though there is no revenue, you claim them in 2008 because that's when you're starting the business. To say you couldn't deduct (for example) advertising expenses in 2008 until you generate revenue in 2009 would be absurd. | |
