Are you Starting a New Business?
Whether you intend to buy an existing business or are starting a new business, you’ll want to keep track of the expenses you incur before you begin the business.
Your “start-up” expenses can generate a tax deduction for you in the year the business becomes active. Among other items, start-up expenses may include amounts paid for:
- Market research
- Travel to find suppliers or distributors
- Pre-opening advertising and employee training
The deduction, which is elective, is available for as much as $5,000 of start-up expenses. Any remaining expenses would have to be deducted ratably over a period of 180 months.
Ordinary and necessary expenses incurred in expanding an already existing, active business are generally deductible without regard to the rules for start-up expenses.
Keep these items in mind when starting a new business.