

Ask HN: Investing in own startup counts as business expense? - DiaHacker

I am starting a company - do not expect any revenues this year, but will be spending my money. Can I count it as a business expense (I have some income from other sources) or should I incorporate right away and call it a loan?
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grellas
Very general guidelines (see a CPA for precise guidance):

Under technical IRS rules, you need to be "in business" in order to be able to
deduct your business-related expenses. That means it can't just a hobby. It
also means that you can't just be doing preparatory steps to start the
business (expenses incurred in preparing to start, even including
incorporation expenses, are normally classified as "startup expenses" and are
not deductable, though you can elect to amortize them over a 5-year period
once you do start).

Assuming that you are in fact "in business," and that you have already
started, you can deduct away regardless of whether you have any current
revenues. With a proper S election for a corporation, or with an LLC, you can
even pass through the losses (to the extent of your tax basis only) and offset
them against other income you may be earning.

Again, check with a CPA for details.

Hope this helps.

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kls
My understanding is that under an S-Corp that yes you can write off expenses
paid by your personal account as a business expense. You need to see a CPA
though so that you are on the right path, they save you a lot of money by
identifying strategies you can use to cover purchases as tax deductible. A CPA
is a cost you can not afford to not afford.

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DiaHacker
Thanks! I'll incorporate

