Deduct those start-up costs NOW!
If you started a new business venture in 2013, you may be in line for a special tax break for entrepreneurs.
DO THIS: Realize a fast write-off for "start-up costs." Normally, these business-related costs must be amortized over time, but you can take a current deduction for up to $5,000 of the qualified expenses.
However, the immediate deduction for start-up costs phases out above a $50,000 threshold.
The Details: Your business can qualify for a current deduction once the operation is "open for business" (i.e., it is ready to accept customers or clients).
The list of deductible start-up expenses includes:
- An analysis or survey of potential markets, products, labor supply, transportation facilities, etc.
- Advertisements for the opening of the business
- Salaries and wages for employees who are being trained and their instructors
- Travel and other necessary costs for securing prospective distributors, suppliers or customers
- Salaries and fees for executives and consultants or for similar professional services
The list does not include interest, taxes or research and experimental costs. These items can be deducted before business commences.
Under current law, a business owner may claim a first-year deduction of up to $5,000 of qualified start-up expenses. Any remainder can be amortized over 180 months. However, the $5,000 immediate write-off phases out on a dollar-for-dollar basis once start-up expenses exceed $50,000.
Claim the deduction for start-up costs on your business tax return. Any remainder is amortized over 180 months with the amortization deduction claimed on Form 4562, Depreciation and Amortization.
As always, should you have any questions or concerns regarding your situation please feel free to call.
DiSabatino CPA
651 Via Alondra, Suite 715
Camarillo, CA 93012
Phone: 805-389-7300
Fax: 805-435-7498