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Keep Good Records<\/b> If you are investigating the possibility of starting your own business, you may have heard that you can deduct the expenses you incur while getting things up and running.<\/p>\n![\"rising](\"https:\/\/directcpa.com\/wp-content\/uploads\/2016\/04\/2.jpg\")
If you are investigating the possibility of starting your own business, you may have heard that you can deduct the expenses you incur while getting things up and running. This is mostly true, though the technicalities of how it is done are more complicated and less immediate than many prospective business owners realize. Review these basics for an understanding of how the process of amortization can help recover start-up costs.
\nWhat is amortization?<\/b>
\nThe IRS defines amortization as the \u201cmethod of recovering (deducting) certain capital costs over a fixed period of time.\u201d Essentially, it means you are able to deduct qualified expenses from starting a business in a series of installments.
\nThe IRS does allow certain, limited expenditures to be deducted the first year your business is active, up to $5,000. Then the remaining costs fall under the amortization policy, which begins the first month your business is active and continues for a period of 180 months (or 15 years).
\nWhat costs qualify for amortization?<\/b>
\nEligible expenses include:<\/p>\n\n
\nKeep in mind that the above provisions apply only to businesses that were successfully opened and operated (consult your tax professional for guidance on expenses related to a failed business), and that the key to successfully amortizing as many expenses as possible is to have receipts, invoices, and bank statements documenting your costs and investments. If you have been working with a tax attorney during your business\u2019s formative stages, he or she can assist you with the process and get you on the road to recovering your investments.<\/p>\n","protected":false},"excerpt":{"rendered":"