Tax Season is In? Are you Claiming your Start Up Cost?

NuevolutionNuevolution Posts: 30subscriber Bronze Level Member
As all you know Tax season is now in session. Do any of you know what you will be deducting this year? Do any of you know what can be deducted and what can`t? As I emphesized on another topic. It`s a good idea to purchase a copy of Nolo "Deduct it" book It give you the ins and outs of what can be deducted and what can`t. Any one claiming Start Up Cost? Do you know how to Claim Start Up cost as a Corporation? Lets all pitch in to see what can be deducted. Here are a few good ones to get you started:1. Your Rent/Mortgage if you work from home2. Your Computer if it`s being used more than 75% of the time for business purpose.3. Mileage and Gasoline4. Marketing5. FoodAny one else? Please add more. Lets see how much we all know about our own business.

Comments

  • NuevolutionNuevolution Posts: 30subscriber Bronze Level Member
    To some extend, Yes everything can be deducted if you can show proof that its being used for your business. But, dont think that if you spend 20K on start up cost that you can claim everything at once, you have to claim start up cost within a 60 month time frame. so you would have to divide 20 into 5 years. Even if you buy clothing for yourself, if you can justify that it was for business use you can deduct it. Example your computer has a life span of 7 years. So you can deduct that for seven years. The book is good, It tells you what to watch out for.
  • sreyssreys Posts: 0subscriber

    Tax regs have changed, so make sure you buy the NEW book, and don`t rely only on what you hear in a forum.
    The first $5k of startup cost is immediately deductible. The balance would generally be amortized over 15 years, not 5 years. 
    Street clothing is generally not an allowable deduction. You could deduct it, but you should expect to lose the deduction under audit. And if you itemize it on your return, you might expect a higher possiblity of audit.
    That PC is 5-year class life, not 7, and will probably be immediately deducted under IRC section 179 rather than depreciated over 5 years under IRC section 167. 
    Scott Reynolds, CPA
     
  • NuevolutionNuevolution Posts: 30subscriber Bronze Level Member
    I think the message here is....hire a good accountant and attorney, and focus on what you know,,,running your business. Outsource what you don`t know. I`m sure it`ll be cheaper in the long run.
    You were wrong that is not the message. The message was (Please read the topic and content)I think that every business owner should be aware of what can be duducted and what can`t. It is good practice for a business owner to know what`s going on in his own business. Yes counting on an attorney and CPA is good idea, but shouldn`t you be aware of them too. So lets say you are expecting a return on something you purchased, what if it can`t be subtracted? Then what? you were expecting it to be deducted, but now you are yelling at your accountant.Standard business practice, know some accouting as well as running your business.
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