Did you start your own business this year? Don’t forget that your tax returns are due on April 15th, which is less than a month away! The IRS shared with James Markham of Ernst & Young that the most common error in start-up company tax returns is in the reporting of start-up expenses. Many business start-ups don’t know what counts as a start-up expense and what does not.
The first thing you need to figure out is what actually constitutes a start-up expense.
A non-recurring cost that pertains to getting your business started such as training, accountant and legal fees, registration charges, and pre-opening expenses all qualify. Anything you pay while investigating a prospective business before you get started also falls into the start-up expense category.
The U.S. Small Business Administration (SBA) describes a start-up cost as either the cost of “investigating the creation or acquisition of an active trade or business” or the cost of getting a business ready to operate.
Remember, the following are not considered start-up expenses:
2. Deductible Interest, Taxes, or Research
3. Experimental Costs
4. Incorporation Expenses
*Technorati Claim Token HXGZVY49XR9W for blog verification purposes only