Hello BellaAmar,
Thank you for participating in the Ask the Experts event. As to your questions:
- Yes, you can write off your startup expenses. Some of those expenses may need to be amortized. See Startup Business Tax Tips for some more guidance.
- Generally, you can only deduct expenses in the year you incur that expense, meaning if you purchased tools and equipment in years prior they are not deductible in a later year. However, donating those tools and equipment to the business will increase your basis in the business as if you contributed cash to invest in the business.
- You can still, and sometimes must, depreciate certain assets even if you operate on a cash basis.
- Since your employee's car is not your car or the business's car, you can reimburse your employee for whatever expense you agree upon, but don't list it as an asset on your books unless he donates it or you purchase it.
- We are no longer able to deduct tax preparation costs if you itemize your personal deductions. As a business expense, tax preparation and other professional fees are perfectly fine to deduct.
I hope that helps.
