RealTown's RealTalk

Business start-up costs are generally capitalized, but you can elect to deduct up to $5,000 of business start-up costs incurred in 2008. The $5,000 on is reduced by the amount your total start-up costs exceed $50,000, and the remaining cost must be amortized.

Start-up expenses are costs incurred while creating an active trade or for investigating the creation of a business or trade. This includes expenses incurred when acquiring an existing for profit activity, as well as expenses incurred during the anticipated production of income.

Common start-up expenses may include:

• Accounting fees
• Analysis, survey, or study of potential markets, products, labor supply, transportation facilities, etc…
• Advertisements for the opening of the business.
• Office equipment and furniture, setup costs
• 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

Keep in mind that certain expenses must be amortized over 5 years. Such expenses include legal expenses and expenses for setting up the business structure (as an LLC, etc...)

Everyone's tax situation is different, and this information should not substitute professional advice. Taxpayers should always consult with their tax advisors to consider specific factors that might affect their situation.

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Editor's Note
Thanks for the tax tips. I encourage everyone to take a look at some of TReXGlobal's fine free software solutions.John