Originally Posted by True Green
I am planning on starting my own lawn care business next year, and will of course be consulting a CPA before and during the process. At this point, however, I would like to get a very general feel of what I will possibly be able to write-off in terms of the start-up costs I will be encountering. The following is a list of things I will be buying to start the business:
- Used truck (probably 2002-2005 Ford or Chevy) - Used for business purposes only 95% of the time
- Enclosed trailer
- Several lawn mowers, Blower, trimmer, various other tools
Other things which will be needed:
- Advertising (probably around $2,000-2,500 budget, door hangers, direct mail, etc)
- Licenses (each city/town where I will conduct business is roughly $50 for a business license)
- Accounting fees
My question is, in general, which of the above necessities will I be able to deduct from my taxes? The only thing that I know for certain is that I can deduct vehicle use by the mile (at about 45 cents/mile), or for actual expenses (gasoline and maintenance).
I have also heard about "Start-up Cost Deductions" where you are able to deduct up to $5,000 in start-up and $5,000 in organizational costs for the first year of business. Have any of you guys ever heard of this and have any of you ever done it?
Thanks in advance for any help you may be able to provide.
As far as start up/ org cost, there is a limit of $5000 which you noted above. The rest of the cost is amortizable of 180 months. An example:
If you incur 6500 of start up cost you can deduct $5000 in year one plus the amortization of the remainder in year one. Amort. of the remainder is done on a straight line method. 1500/180 so about $100 for a total start up deduction of $5100 in year one. In year two you can deduct another $100 as start up and 100 every year over the next 14 years....
Start up and org cost are different from your everyday operation expenses which MAY be deductible like advertising expense, fuel, labor, taxes, insurance etc.