Small Business Tax Question

Forum|Forum|1 year ago
August 28, 2024
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I am starting a company, I am setting up my llc right now but having a headache of a time trying to figuire out if my expenses so far can be written off / deductable; so i have already spent some money / borrowed money from my parents on getting samples made, ordering my bulk order of products, and testing out different manufacturers products for packaging; I’m also about to start spending some money pn LC filing fee’s, hiring a registered agent service, and everything else that comes with registering my llc, once I start making sales can i pay myself, and my parents, back and then write it off as start up / business expenses, as alot of it (filing fees, registred agent fee’s, etc) would have been impossible to be spent on a business bank account as i need to pay for those before I can set up my llc and get my ein, i’m very confused in the answers online since everything has been spent on personal accounts so far (obviously) and want to write them off; please help me

SwapnaM

Start-up costs are amounts the business paid or incurred for creating an active trade or business or investigating the creation or acquisition of an active trade or business. Start-up costs include amounts paid or incurred in connection with an existing activity engaged in for profit, and to produce income in anticipation of the activity becoming an active trade or business.

Start-up costs include amounts paid for the following:

An analysis or survey of potential markets, products, labor supply, transportation facilities, etc.
Advertisements for the opening of the business.
Salaries and wages for employees who are being trained and their instructors.
Travel and other necessary costs for securing prospective distributors, suppliers, or customers.
Salaries and fees for executives and consultants, or for similar professional services.

Nonqualifying costs

Start-up costs don't include deductible interest, taxes, or research and experimental costs.

https://turbotax.intuit.com/tax-tips/small-business-taxes/startup-business-tax-tips/L7SOyYMzr

A deductible expense only does you some good if you can prove you spent the money. The burden of proof is on you to show that you spent what you said you spent. It is highly recommended that you open a separate bank account or use a separate credit card used only for business for easy record-keeping. But if you can provide receipts as evidence for payment, it would suffice as a proof.

Common business deductions: https://turbotax.intuit.com/tax-tips/small-business-taxes/taking-business-tax-deductions/L5RueYPVS

@ashna Thanks for the question!!

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