{"id":290,"date":"2021-10-20T20:07:00","date_gmt":"2021-10-20T20:07:00","guid":{"rendered":"http:\/\/www.rikardneal.com\/blog\/?p=290"},"modified":"2021-10-29T20:07:46","modified_gmt":"2021-10-29T20:07:46","slug":"business-start-up-costs-whats-deductible-2","status":"publish","type":"post","link":"https:\/\/www.rikardneal.com\/blog\/index.php\/2021\/10\/20\/business-start-up-costs-whats-deductible-2\/","title":{"rendered":"Business Start-Up Costs &#8212; What&#8217;s Deductible?"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-128 alignleft\" src=\"http:\/\/www.rikardneal.com\/blog\/wp-content\/uploads\/2019\/05\/GettyImages-465096142-300x200.jpg\" alt=\"Rikard &amp; Neal QuickBooks\" width=\"300\" height=\"200\" srcset=\"https:\/\/www.rikardneal.com\/blog\/wp-content\/uploads\/2019\/05\/GettyImages-465096142-300x200.jpg 300w, https:\/\/www.rikardneal.com\/blog\/wp-content\/uploads\/2019\/05\/GettyImages-465096142-768x513.jpg 768w, https:\/\/www.rikardneal.com\/blog\/wp-content\/uploads\/2019\/05\/GettyImages-465096142-1024x683.jpg 1024w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/>Launching a new business takes hard work &#8212; and money. Costs for market surveys, travel to line up potential distributors and suppliers, advertising, hiring employees, training, and other expenses incurred before a business is officially launched can add up to a substantial amount.<\/p>\n<p>The tax law places certain limitations on tax deductions for start-up expenses.<\/p>\n<ul>\n<li>No deduction is available until the business becomes active.<\/li>\n<li>Up to $5,000 of accumulated start-up expenses may be deducted in the tax year in which the active business begins. This $5,000 limit is reduced (but not below zero) by the excess of total start-up costs over $50,000.<\/li>\n<li>Any remaining start-up expenses may be deducted ratably over the 180-month period beginning with the month in which the active business begins.<\/li>\n<\/ul>\n<p>Example: Gina spent $20,000 on start-up costs before her new business began on July 1, 2020. In the 2020 tax year, she may deduct $5,000 and the portion of the remaining $15,000 allocable to July through December of 2020 ($15,000\/180 \u00d7 6 = $500), a total of $5,500. The remaining $14,500 may be deducted ratably over the remaining 174 months.<\/p>\n<p>Instead of deducting start-up costs, a business may elect to capitalize them (treat them as an asset on the balance sheet). Deductions for &#8220;organization expenses&#8221; &#8212; such as legal and accounting fees for services related to forming a corporation or partnership &#8212; are subject to similar rules.<\/p>\n<p>Call us at\u00a0<strong>901-685-9411<\/strong>\u00a0and request a\u00a0<a href=\"https:\/\/www.rikardneal.com\/consultation.htm\">free initial consultation<\/a>\u00a0to learn more.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Launching a new business takes hard work &#8212; and money. Costs for market surveys, travel to line up potential distributors and suppliers, advertising, hiring employees, training, and other expenses incurred before a business is officially launched can add up to a substantial amount. The tax law places certain limitations on tax deductions for start-up expenses. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":{"0":"post-290","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business-tax","7":"entry"},"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=290"}],"version-history":[{"count":1,"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/290\/revisions"}],"predecessor-version":[{"id":291,"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/290\/revisions\/291"}],"wp:attachment":[{"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.rikardneal.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}