For a small business owner, tax write off's are one of the big perks at the end of the year. And, when you are starting up your business, you want to write off everything you possibly can. While there are some expenses that you are only able to partially deduct, like interest from business loans and costs from cash advances and credit card processing, there are a lot that you might be surprised you can completely deduct. You know that businesses that have been established for a while can write off a lot of their operating expenses, but what about those expenses that you are racking up just starting up your business? Like your credit card swipe machines? Here are some tips on deducting startup costs from your business to help save you some money come tax time:
- Track everything from the very beginning – before you even start to think about starting a business, have a way to keep track of it all. Your startup expenses are anything associated with setting up your business or the purchase of a business. These things include: analysis of your potential market, consultants, supplies, advertising, paying employees, and so on. It doesn't matter what you spend, just keep track of everything from the very beginning.
- Track all of your organization costs – these are any fees or costs that go along with organizing your new business. These include: incorporation fees, accounting fees, attorney fees for filing paperwork, and so on.
3. Find out if you can get any type of deduction up front – if you have already done all your research for your business and you find out that you can write off $10,000 in business startup and organization expenses, do it! Even after you've already written off the initial startup costs, you may still be able to write off other expenses that didn't fall into your initial startup.
4. You can get great tax benefits from equipment or merchandise that you bought for yourself – if you are using your personal computer, equipment, furniture, or other items that you bought for yourself in your business start up, then you can depreciate them and get a tax write off at the end of the year for using them for your new business.
5. Make sure that you know what you can write off, and what can wait – there are certain rules that apply to items that you write off your first year of business versus your startup. So, be sure that you know what you can and can't write off and wait to buy those items that you can't write off in your startup until you have been in business for a year.
If you are not sure which items and expenses you can write off, find a tax professional to go over them all with you before you file your taxes. This can help to save you a lot of money when you need it the most since it takes a lot to open a business.