Question of the Day: Managing startup expenses
I think I am in a fairly typical situation for a Web 2.0 startup. I am the sole founder and developer for my site: I’ve been working on it for the 7 months, and hope to launch a public beta by end of July. For the past 7 months, I have kept my expenses extremely low by doing all the work myself. Nevertheless, I have still accumulated certain expenses.
Now I need to know: What expenses I can deduct from my taxes?
My understanding is that in order for me to deduct my business expenses, I need to have business income. Is this correct?
As a Web 2.0 startup, it’s hard to say if I will generate revenue this year. So I could use some advise from others on how they dealt with business expenses during this pre-revenue/pre-income period, and how they handled them with regard to taxes.
I should mention that I am doing this full-time, with no other job currently, so I have no regular income. I am, however, thinking about selling some stocks so that hopefully I can get some tax relief from my business expenses.
Perhaps these will help?
http://smallbusiness.aol.com/manage/finance/article/_a/startup-tax-deductions/20051213182509990005 http://www.entrepreneur.com/money/taxcenter/article178812.html http://www.startupnation.com/articles/1178/1/AT_How-to-Write-Off-Your-Startup-Costs.asp}
I believe we were able to amortize our startup expenses over something like 5 years. So if we spent 100k before launching, we can deduct 20k/year over 5 years.}