How to Write off Startup Costs [Video]

If you investigate the possibility of creating or starting a business, you might be able to deduct your startup costs.
Startup costs include the cost of:
• Travel
• Marketing reports
• Legal and accounting services
• Engineering and architectural surveys
The deductibility of startup costs depends on two factors:
• Whether you’re currently in a business that is the same or similar to the type of business you’re thinking of starting or acquiring
• Whether you actually end up starting or acquiring the new business
Let’s say you’re in the restaurant business.

If you fly to Chicago to investigate the possibility of opening a restaurant there, the cost of your flight and any other startup costs are deductible whether or not you end up starting a restaurant in Chicago.
This is because you were thinking of expanding your current business (the restaurant business).

But let’s say you flew to Chicago to investigate the possibility of opening a dog kennel.
Because you’re currently in the restaurant business, the tax implications are different.

If you decide not to start a dog kennel, then your costs of flying to Chicago are not deductible.

But if you do start a dog kennel, then the cost of your flight and any other startup costs are deductible as follows:
• You can immediately deduct up to $5,000 of your startup costs (this is reduced dollar-for-dollar by the amount that your total startup costs exceed $50,000)
• Any startup costs not immediately deducted are expensed over 180 months, beginning with the month in which the business begins
Thus, if you start the dog kennel and incur $10,400 of startup costs, you can deduct $5,000 of startup costs and deduct the remaining $5,400 over 180 months (which would be $30/month).

—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education accessible to all people.
—
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES
* http://eepurl.com/dIaa5z
—
HIRE MICHAEL MCLAUGHLIN, PHD, CPA
* https://michaelmclaughlin.com/hire-me
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
* https://edspira.thinkific.com
—
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725
* Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc
* Website: https://www.edspira.com/podcast-2/
—
GET TAX TIPS ON TIKTOK
* https://www.tiktok.com/@prof_mclaughlin
—
ACCESS INDEX OF VIDEOS
* https://www.edspira.com/index
—
CONNECT WITH EDSPIRA
* Facebook: https://www.facebook.com/Edspira
* Instagram: https://www.instagram.com/edspiradotcom
* LinkedIn: https://www.linkedin.com/company/edspira
—
CONNECT WITH MICHAEL
* Twitter: https://www.twitter.com/Prof_McLaughlin
* LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin
—
ABOUT EDSPIRA AND ITS CREATOR
* https://www.edspira.com/about/