{"id":11,"date":"2022-03-14T19:55:05","date_gmt":"2022-03-14T19:55:05","guid":{"rendered":"https:\/\/www.hst-tag.com\/blog\/?p=11"},"modified":"2022-02-03T19:56:59","modified_gmt":"2022-02-03T19:56:59","slug":"business-start-up-costs-whats-deductible","status":"publish","type":"post","link":"https:\/\/www.hst-tag.com\/blog\/business-start-up-costs-whats-deductible\/","title":{"rendered":"Business Start-Up Costs &#8212; What&#8217;s Deductible?"},"content":{"rendered":"<p><img decoding=\"async\" loading=\"lazy\" class=\"size-medium wp-image-12 alignleft\" src=\"https:\/\/www.hst-tag.com\/blog\/wp-content\/uploads\/2022\/02\/ThinkstockPhotos-80607683-300x200.jpg\" alt=\"Smiling businesswoman at meeting\" width=\"300\" height=\"200\" srcset=\"https:\/\/www.hst-tag.com\/blog\/wp-content\/uploads\/2022\/02\/ThinkstockPhotos-80607683-300x200.jpg 300w, https:\/\/www.hst-tag.com\/blog\/wp-content\/uploads\/2022\/02\/ThinkstockPhotos-80607683-768x512.jpg 768w, https:\/\/www.hst-tag.com\/blog\/wp-content\/uploads\/2022\/02\/ThinkstockPhotos-80607683-1024x683.jpg 1024w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/>Launching a new business takes hard work &#8212; and money. Costs for market surveys, travel to line up potential distributors and suppliers, advertising, hiring employees, training, and other expenses incurred before a business is officially launched can add up to a substantial amount.<\/p>\n<p>The tax law places certain limitations on tax deductions for start-up expenses.<\/p>\n<ul>\n<li>No deduction is available until the business becomes active.<\/li>\n<li>Up to $5,000 of accumulated start-up expenses may be deducted in the tax year in which the active business begins. This $5,000 limit is reduced (but not below zero) by the excess of total start-up costs over $50,000.<\/li>\n<li>Any remaining start-up expenses may be deducted ratably over the 180-month period beginning with the month in which the active business begins.<\/li>\n<\/ul>\n<p>Example: Gina spent $20,000 on start-up costs before her new business began on July 1, 2020. In the 2020 tax year, she may deduct $5,000 and the portion of the remaining $15,000 allocable to July through December of 2020 ($15,000\/180 \u00d7 6 = $500), a total of $5,500. The remaining $14,500 may be deducted ratably over the remaining 174 months.<\/p>\n<p>Instead of deducting start-up costs, a business may elect to capitalize them (treat them as an asset on the balance sheet). Deductions for &#8220;organization expenses&#8221; &#8212; such as legal and accounting fees for services related to forming a corporation or partnership &#8212; are subject to similar rules.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Launching a new business takes hard work &#8212; and money. Costs for market surveys, travel to line up potential distributors and suppliers, advertising, hiring employees, training, and other expenses incurred before a business is officially launched can add up to a substantial amount. The tax law places certain limitations on tax deductions for start-up expenses. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":""},"categories":[],"tags":[],"_links":{"self":[{"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/posts\/11"}],"collection":[{"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/comments?post=11"}],"version-history":[{"count":1,"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/posts\/11\/revisions"}],"predecessor-version":[{"id":13,"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/posts\/11\/revisions\/13"}],"wp:attachment":[{"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/media?parent=11"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/categories?post=11"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hst-tag.com\/blog\/wp-json\/wp\/v2\/tags?post=11"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}