An Ernst & Young partner explains why you don’t want a do-it-yourself approach to tax return prep this year (even if you’re bootstrapping).
In my discussions with the Internal Revenue Service, I hear time and again that the most common error in start-up company tax returns is in the reporting of start-up expenses. Most start-up filers make mistakes on what counts as a start-up expense, what is deductible to reduce the amount of taxable income–or when it is deductible.
What’s a Start-up Expense?
Start-up expenses are the costs of getting started in business before you actually begin doing business. Start-up costs may include expenses for advertising, supplies, travel, communications, utilities, repairs, or employee wages. These expenses are often the same kinds of costs that can be deducted when they occur after you open for business. Pre-operating costs also include what you pay for investigating a prospective business before you get it started.
For example, they may include:
- A market review of potential business opportunities
- An analysis of open office spaces, or labor potential in your community
- Marketing and advertising to open shop
- Salaries and wages for employees who are being trained, and their instructors
- Travel and other necessary costs for signing up prospective distributors, suppliers, or customers
- Salaries and fees for executives and consultants or for other professional services
…to read this article in full, visit leading US small business resource, Inc.