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Thread started 19 Jun 2015 (Friday) 11:57
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Tax Question - Writing off startup expenses

 
njstacker22
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Jun 19, 2015 11:57 |  #1

My LLC (in NJ) was official Jan 16th, 2015. It's to my understanding that startup expenses can be written off. My question is, all of my startup costs were from February 14. Would the startup costs be written off on this years tax returns (2014) or next year when I file taxes on my business for the first time? If I'm missing important information please ask.

Thanks in advance for the help,.


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Jun 19, 2015 12:01 |  #2

Hello stacker - congrats and good luck on your LLC. The short answer is that I don't know.

I'd strongly suggest engaging a CPA. Ours is worth his weight in gold - fortunately he does not charge accordingly - he does our regular taxes as well as my photography business, and provides advice throughout the year on a variety of things. He is a pro who is well worth the cost, which of course is deductible :-)


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Jun 19, 2015 12:09 |  #3

njstacker22 wrote in post #17603356 (external link)
It's to my understanding that startup expenses can be written off.

All business expenses qualify as deductions, but that doesn't mean you can always take a deduction for the entire cost of something in the year you paid for it. There are specific rules for depreciation and amortization.

See irs.gov for federal and something else for state and local, if applicable.


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njstacker22
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Jun 19, 2015 12:13 |  #4

sapearl wrote in post #17603363 (external link)
Hello stacker - congrats and good luck on your LLC. The short answer is that I don't know.

I'd strongly suggest engaging a CPA. Ours is worth his weight in gold - fortunately he does not charge accordingly - he does our regular taxes as well as my photography business, and provides advice throughout the year on a variety of things. He is a pro who is well worth the cost, which of course is deductible :-)

I need to find this guy :-)


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njstacker22
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Jun 19, 2015 12:16 |  #5

OhLook wrote in post #17603374 (external link)
All business expenses qualify as deductions, but that doesn't mean you can always take a deduction for the entire cost of something in the year you paid for it. There are specific rules for depreciation and amortization.

See irs.gov for federal and something else for state and local, if applicable.

I'm semi familiar with the depreciation and amortization of supplies/equipment but I'm not really sure how they work. If I were to write them off for this year I wouldn't think there would be any depreciation until next year. If I need to wait until 2015 to write off the expenses then that may be a different story. This is pretty much what I'm attempting to find out. It's my understanding that you can write off business expenses as long as they are within 1yr of your LLC. So I guess I could write them off for this year but how do I write off a business expense for the year or 2014 when technically I didn't have a business.


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Jun 19, 2015 12:33 as a reply to  @ njstacker22's post |  #6

One thing that I really liked about my CPA (that I of course did not know) was that certain things would be depreciated all at once, while he spread other items over several years.

Last year I purchased a DROBO and its associated drives for about $1000+. Based upon my real and projected earnings, I believe he spread that deduction across a few years. A knowledgeable person will take your earning factor into consideration when deciding how to prorate a deduction, what portion of it is legitimate for the business, and IF it is a valid deduction in the first place.

Do you have any friends in other lines of work who use accountants? They may be in a position to recommend somebody for you.


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Jun 21, 2015 07:18 |  #7

I'm not a tax expert, but I did do income taxes professionally a few years ago. From what I understand in the OP's first post, he made investments in his business in 2014 but didn't open the doors to business until 2015. From my understanding, all the investments made in 2014 merely add to the basis of the value of the business and are not deductible. If the business is successful and eventually sold for a profit, your taxable basis is reduced by the cost of investments made. As to writing off expenses for equipment on an ongoing basis, most of your photographic equipment can be written off 100% in the year the purchases were made if you opt to use a Section 179 deduction; otherwise the value of the purchases must be depreciated over several years, and eventually these depreciations must be recaptured if you sell the used gear. Sounds complicated? Welcome to the IRS.

For help understanding Section 179 deductions, see the IRS web page at http://www.irs.gov/pub​lications/p946/ch02.ht​ml (external link)


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Jun 21, 2015 18:21 |  #8

BioSci wrote in post #17605148 (external link)
I'm not a tax expert, but I did do income taxes professionally a few years ago. From what I understand in the OP's first post, he made investments in his business in 2014 but didn't open the doors to business until 2015. From my understanding, all the investments made in 2014 merely add to the basis of the value of the business and are not deductible. If the business is successful and eventually sold for a profit, your taxable basis is reduced by the cost of investments made. As to writing off expenses for equipment on an ongoing basis, most of your photographic equipment can be written off 100% in the year the purchases were made if you opt to use a Section 179 deduction; otherwise the value of the purchases must be depreciated over several years, and eventually these depreciations must be recaptured if you sell the used gear. Sounds complicated? Welcome to the IRS.

For help understanding Section 179 deductions, see the IRS web page at http://www.irs.gov/pub​lications/p946/ch02.ht​ml (external link)

The question is, can I write them off even though my business wasn't up and running in 2014 or do they get written off in 2015? Good info though, thanks.


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Jun 22, 2015 07:15 as a reply to  @ njstacker22's post |  #9

In 2014, you did not have a photography business, so you can't write off or deduct expenses made in 2014, either in 2014 or in 2015.


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njstacker22
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Jun 22, 2015 17:47 |  #10

BioSci wrote in post #17606242 (external link)
In 2014, you did not have a photography business, so you can't write off or deduct expenses made in 2014, either in 2014 or in 2015.

Why not 2015? I started my LLC in February of this year. It's to my understanding that you can write off start up expenses that were made within 12 months of the business. Is this false?


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Jun 23, 2015 01:17 |  #11

njstacker22 wrote in post #17606863 (external link)
Why not 2015? I started my LLC in February of this year. It's to my understanding that you can write off start up expenses that were made within 12 months of the business. Is this false?

Jeez, you're arguing tax regulations with someone on the internet? Find a local professional! I was an accountant for 35 years and still used a CPA for tax returns and advice.


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Tax Question - Writing off startup expenses
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