November 18, 2011 – San Francisco, CA. San Francisco is home to many new small businesses, from the tech savvy new businesses South of Market to the next Mom-and-Pop liquor store or Deli, San Francisco and the whole Bay area is a hot bed of small business entreprenuership. In this blog post, we share a little of the accounting / tax issues in starting up a small business.
Expenses, Expenses, Expenses
There are many detailed sources of information on the Internet about start up expenses vs. taxation. So our purpose in this blog post is just to look at the “big picture.”
The long and short of it is if you are seriously involved in starting up a business, whether that business actually starts or not, those business-related expenses are probably tax deductible. The trick is to keep good records that clearly show that these are business (and not personal) expenses! We can help with that.
Secondly, let’s say you are thinking of acquiring a business (perhaps a franchise). Your expenses relating to determining whether or not to acquire that new business also could be tax deductible. Again, the litmus test is whether this is a serious business effort by you to start, or acquire, a business. Even if you ultimately decide not to, that expense would be tax deductible.
Other Issues involved in Starting a Small Business
Generally speaking, educational expenses are not tax deductible, nor are expenses that are personal in nature. If you fly to Las Vegas for fun, and happen to attend a seminar on starting a small business that would not qualify. But if going to Vegas for the seminar were your primary purpose that would be tax deductible.
Consult with Safe Harbor CPAs
Our purpose in our blog is not to give out official tax advice. The issues are too complex. Rather, we want to set the tone, and get a few of the issues out there.
If you are thinking of starting a small business, we can help. We can help not just with tax planning as to what expenses should be tax deductible for your small business, but in all the other in’s and out’s of how accounting and bookkeeping issues impact small business. A good, well organized start to your small business is key. Reach out to us to discuss your small business tax and accounting needs!
Starting a small business in San Francisco can be expensive as we are in one of the highest cost cities in the USA in one of the highest tax states in the country. So even if you ultimately do not go into business, you can still save a lot on taxes vs. your serious effort to investigate starting a small business. Let us help!