Business expense claims time limit..?

I'm planning to start a business which will use a new blog as the main "base station" (I will eventually sell ebooks, do affiliate marketing, etc). However first I want to start up the blog and get it going for perhaps 6 or more months before actually starting the business portion. How far back can I claim "business expenses" in this scenario when I actually start the business? Thanks for any clarification you can offer.

 

Business expenses are claimed for the calendar year.

 

Thanks. To clarify, I can claim expenses, even if they were "spent" PRIOR to actually incorporating the LLC? thanks again

 

Yes, business expenses can be claimed at any point in the business' life, even before incorporation.

 

What country are you in? If you are in the USA, you are about to discover the incredible stupidity of the American tax system. This is why so many businesses have left.

http://www.irs.gov/publications/p535/ch08.html
http://www.irs.gov/publications/p535/ch07.html

See the section on "start-up costs" and see what you may expense in the current calendar year and what you must amortize over time.

 

Awesome, thank you both so much for your helpful replies! This really clarifies and answers exactly what I needed to know. billzo, yes, I am aware of how ridiculous, complicated, and absurd the taxes are. I've spent more time researching and attempting to understand taxes and record keeping, than any other area of planning my business. Don't even get me started on state taxes.....

 

Good point. Note that you will be obligated to pay federal and state income taxes at the end of each year, but do not forget that you will likely also have to collect your state's sales tax immediately for sales to other residents of the state. To do so, you will need to get a retail permit or whatever your state calls it.

 

Doing taxes last year was an incredibly frustrating experience. It's on my To Do list now. So I will get started on it probably by the end of this week--and I am dreading it.

You have to pay taxes quarterly if you will owe more than a thousand dollars over the course of the year and possibly less to the state. Then there is also SS and Medicare tax. Then if you are getting tax credits for health insurance coverage, I read there is another form you have to file for that, too. And often, if you have to fill out another form that form may require you to fill out yet another form. As for state sales tax, each state is different and some have a dollar amount on sales volume to residents in the state that if you cross you have to collect and remit sales tax. It is a nightmare.

I was reading an article the other day about how professional athletes have to pay income tax to each state they play in for every day they are in the state. Sounds like fun.

 

You are correct and it gets even crazier with some states, @billzo. One particular state (that is known for being in a lot of trouble financially) has tried to engage with one of my businesses even though we have no physical presence in that state. They would like us to collect sales tax for products that we sell to their residents and for which we use a drop shipper in their state. I conferred with my accountant and tax attorney and came to the conclusion that they have no legal ground to ask for this and are asking in the hope that we stupidly comply (some businesses undoubtedly do this.) That is why I have a corporate accountant and a corporate attorney...I let them handle all of this nonsense for me.

 

Taxes have been the one thing that has most made me reconsider even trying to start my own business. The more I research taxes, the more ridiculous and complex it gets. I can't let it foil me though. My only hope is to hire a book keeper and a CPA. The only problem with that is I am already going to have losses for the first year or two, so I don't even know if I can afford it. Wish me luck!

 

Good luck! Keep us posted.

 

Hii, I agree business expenses can be claimed at at point of business life, you can ask a business insurance consultants and take guidance on how to move further.