Start Up Costs vs Revenues


T

Tyler Franks

It is my memory from somewhere that an individual starting a sole
proprietorship is suppose to wait until his first revenue to begin filing
returns and writing off startup costs. But I cannot find adequate
reference. I am already familiar with the option to write off up to $5000
and amortize the rest. My question deals with when to file the first
Schedule C. Do we/ Should we need to wait for income to begin the process?
Does the answer change if part of the cost outlaid is for depreciable
property? (This is a bonafide business, not a hobby)

Tyler
 
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H

Harlan Lunsford

Tyler said:
It is my memory from somewhere that an individual starting a sole
proprietorship is suppose to wait until his first revenue to begin filing
returns and writing off startup costs. But I cannot find adequate
reference. I am already familiar with the option to write off up to $5000
and amortize the rest. My question deals with when to file the first
Schedule C. Do we/ Should we need to wait for income to begin the process?
Does the answer change if part of the cost outlaid is for depreciable
property? (This is a bonafide business, not a hobby)

Tyler
Forget about first revenue for a moment. On what date was your business
operational and open for business? What kind of business is it? retail?
wholesale?
service?

What have you done so far to solicit customers/clients?

ChEAr$$$,
Harlan Lunsford, EA n LA
 
T

Tyler Franks

Harlan Lunsford said:
Forget about first revenue for a moment. On what date was your business
operational and open for business? What kind of business is it? retail?
wholesale?
service?

What have you done so far to solicit customers/clients?
Well, understanding that every case is different, I had hoped for a generic
answer. But I'll set out some parameters. Still I'm looking for specific
references for accuracy.

Oct 2007 Bought a shed to house inventory
Nov 2007 bought plant seedlings (inventory)
Dec 2007 advertised and created bank accounts...got licenses... paid
utilities (water for plants) fertilizer Open for business but no sales.

Jan 2008 sold $4000 worth of plants.

Suppose was 2009 before sold plants?
 
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H

Harlan Lunsford

Tyler said:
Well, understanding that every case is different, I had hoped for a generic
answer. But I'll set out some parameters. Still I'm looking for specific
references for accuracy.

Oct 2007 Bought a shed to house inventory
Nov 2007 bought plant seedlings (inventory)
Dec 2007 advertised and created bank accounts...got licenses... paid
utilities (water for plants) fertilizer Open for business but no sales.
Key here is "open for business", and since you had advertised, customers
were expected at any moment. Thus I would choose Dec 1, 2007 as opening
date of business. the shed will be depreciated starting in 2007 as will
other expenses which will create a loss for 2007.
Jan 2008 sold $4000 worth of plants.

Suppose was 2009 before sold plants?
But it wasn't, so there.

Congratulations though. The nursery business can be iffy and subject to
great variability. Example of course is down here in the South last
summer. as long as it still rains, I have a small creek by side of my
property, but come June, I'm not so sure i'll have water for my flowers
and tomatoes. Or my cotton plants which I plant each year as tradition.

ChEAr$$$,
Harlan Lunsford, EA n LA
in the land of cotton
 

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