USA Deferred Startup Costs - Cash Basis


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Hello,

I am not a professional accountant but I am a corporate executive very familiar with accrual accounting and GAAP. Unfortunately, my knowledge and experience is creating a great deal of confusion trying to help my wife and her business partner get their books accurate for a small multi-member LLC.

The situation is this - my wife’s small business incurred roughly $53k of startup costs at the end of last year and didn’t open for business until Jan. 10 of this year. I have two questions: 1) under cash basis accounting, do they amortize startup costs at all or should they deduct all startup expenses that occurred in 2018; and 2) if they are to amortize startup costs, is it correct that they would not deduct any such expenses for 2018 and would take the upfront deduction ($5,000-$3,000) and amortize the rest over 180 months beginning January 2019? In the case of (2), I would create a long-term asset for the deferred startup costs that are to be amortized, correct?

I understand that this is informal advice only.
 
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