A client asked me this week if he can deduct all of his expenses connected to the investigation and creation of a business he will be opening later this year.
These are expenses that he incurred before the business will be opened and includes:
- Customer market surveys
- Advertising the grand opening
- Legal and consulting fees paid in connection with starting the business
- Employee wages and training costs incurred before the business opens
- Costs related to locating a suitable retail space
- Travel expenses for research on the business
The amount that can be deducted in 2012 for start-up costs is limited to $5,000. The remainder, if any, will be amortized evenly over 180 months.
Caution: The $5,000 deduction is reduced by the amount of start-up costs over $50,000. This means that the current year’s deduction is phased-out once you spend $55,000 on the start-up.
Until next time, thank you for your continued support and let’s make this year our most profitable year ever!
Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer comprehensive tax info over the Internet, no matter how well-researched or written. And remember, I love my readers, but having me bookmarked on your computer doesn’t make you a client. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.