I'm finishing up a successful KickStarter campaign. The approximately $8000 is going to be used as capital for my software startup. I'm currently structured as a sole proprietorship, so the $8000 is going into my personal checking account.
I have two concerns related to my situation:
If I spend this $8000 on startup costs before the end of the year, I can write the entire amount off, thus effectively negating its would-be increase on my tax bill. However, if I don't spend the entire $8000 before year-end, I'm on the hook for it the difference at tax time. Is this correct?
I plan on switching over to an LLC at some point. If I switched now, I would then transfer the $8000 from my personal checking into my LLC bank account before years end. As an individual would this be a write off on my individual tax bill? And, as an LLC would this be considered capital, not revenue, and therefore not pass through to myself as income?
Thanks in advance!