Yes, you can claim Startup Costs.
A start-up cost is recoverable if it meets both of the following requirements:
- It's a cost a business could deduct if they paid or incurred it to operate an existing active trade or business, in the same field as the one the business entered into.
- It's a cost a business pays or incurs before the day their active trade or business begins.
Start-up costs include amounts paid for the following:
- An analysis or survey of potential markets, products, labor supply, transportation facilities, etc.
- Advertisements for the opening of the business.
- Salaries and wages for employees who are being trained and their instructors.
- Travel and other necessary costs for securing prospective distributors, suppliers, or customers.
- Salaries and fees for executives and consultants, or for similar professional services.
Here’s how businesses can deduct startup costs from their federal taxes.
No, it will not mess with your Social Security.
- However, as you start to make substantial profits, it could trigger a tax on your Social Security.
- In addition, as your business becomes profitable it will trigger the Self-Employment tax plus tax on income tax on the profits.
- The self-employment tax rate is 15.3%. That rate is the sum of 12.4% for Social Security and 2.9% for Medicare.
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