Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote 2 down vote favorite

I am doing taxes for someone who had about $1,500 in 2011 expenses for a new business (sole-proprietorship) but no income. Can she deduct these start-up costs in 2011 or will she have to add them to 2012 taxes even though the expenses were in 2011. The IRS regs say "int the year the business begins" but I am not sure if that means first year with revenue.

share|improve this question

2 Answers

up vote 1 down vote

The business begins when the business is incorporated. Business may have investments for which they do research and pay salaries and only after the product is ready revenues may begin. That is how my accountant explain it to me.

share|improve this answer
Thank you. Now I am considering it the other way -- do we HAVE to deduct the start-up costs in the year they were incurred or can they be deducted next year when there is actually revenue? I think they can be saved for next year, any ideas? – Melinda Mar 4 '12 at 6:17
That is an accountant question. My guess would be unlikely. – Karlson Mar 4 '12 at 6:19
up vote 0 down vote

Does it really matter? You will either pay less taxes this year, or next year. I would rather have the money now. We are not talking about a large sum of money. It will save them ~$500-600 on their tax bill.

share|improve this answer

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.