Starting a new business brings a host of costs that go into effect
before the business even gets off the ground. When filing a tax return,
these start-up costs, which are considered capital expenses, can be
lumped together into a single category and deducted as such. Later the
filer can choose to amortize the individual expenses over time, which
means deducting the cost in equal increments over a period of 60 months
or more. Most new business owners must pay for advertising, training,
office equipment, and other expenses before even launching the company.
If the business plan is halted and the organization becomes defunct
before any business is done, these pre-functioning costs are not
deductible and become the responsibility of the individual to
pay—assuming the business is not a corporation. Expenses accrued after
beginning the business can be deducted and would count as capital loss.
Based in Los Angeles, Duban Sattler and Associates, LLP, delivers high quality financial and tax services to a select clientele.
