Listen: Income Report For January 2020: Start Up Expenses Are Tax Deductible
"Alright fire nation as promised in the intro. We do have a doozy doozy of an income report as always we have Josh on the Mike. We have kate on the Mike and every other month we get a treat with Mr David Lizard. Bram as well to talk all things legal and he's going to be on the Mike. Today as well so a lot of fun things upcoming so hold onto your seats because there's GonNa be a great episode in Fact GonNa Pass over to Josh Right now. Because he has a monthly tax tip about our start up costs tax deductible. So Josh no spoilers brother just take it away or John this month. We're going to tackle another question from podcasters paradise number and this is a question. Get quite a bit. I think we may be touched on here and there in the income report. But I don't know forever went into detail on it and the question is regarding spending money to start your business in whether that's tax deductible even if you have not yet brought in income in the business okay so cost like researching the business education to give it going equipment to get it. Setup organizational cost. Set up your entity all these things. You're spending money on before the businesses even bringing in money and in this case in particular podcasters paradise member. She's wondering about the cost of joining podcasters paradise. And he said we get this question all the time and what these are called in tax world are start up expenses and people want to know are these deductible if they are deductible winner they deductible and other deductible once or they have to be what they call amortize over several years and of course this is taxes so the real answer is it depends but I'm GonNa go for a few general rules here number one. Your start up. Expenses are tax deductible. But only if you eventually start the business okay so if you want to spend ten thousand dollars wanting to start a business but then you never ended up starting the business. You never bring any any money in those will not be deductible okay but if you do start a business you do bring money in eventually. You do get inducted expenses. Even if they occurred before brought in that money the naked general rule is that the cost will be deductible in the year. You are actually open for business. Meaning you're in money. You have something for sale. You have a service you're offering all right. They're not deductible necessarily in the year they are incurred all right. It's when the the businesses open for business ready to bring in money. That's the year that those startup costs can be deducted regardless of when they occurred and the final general rule to keep in mind. Is that the first. Five thousand dollars of those expenses can be expensed all at once. It can be written off all at once. The remaining balance has to be amortized over fifteen years in just a fancy tax word. Meeting spread out over fifteen years. Okay so let's take a look at a quick example but let's use this podcast. You decide that you're going to start a podcasting. Businesses eventually going to bring in advertising revenue and in November of two thousand nineteen."