[YL84]

Hello everyone,

I am helping a relative with starting up his new business and help him set up Gl accounts and record expenses in QB. I have a few questions that I would need advices from tax experts in this forum.

1) How do you present start-up costs on the balance sheet? Does it show as an asset such as “Start-Up Costs”? He cannot expense $5,000 start-up costs in the first year because his total start-up costs are about $100,000. I research on this subject. We need to amortize the start-up costs over 15 years (180 months). If this is the case, do I book a monthly amortization expense of $555.56 on the income statement once the business starts operating? This will become an expense item. I am still very confused of how to present the start-up costs on balance sheet and how to amortize the costs to expenses shown on the income statement.
2) My relative is currently commute a lot to the business site and it’s still under construction. He has to commute about 2 hours round trip each time to the store to check on construction progress and this has been going on for 1-2x a week and for 2-3 months construction period. The business has not started operating yet. Is this mileage cost considered start-up costs? The start-up rule just mentions “travel and expenses for securing distributors or suppliers or acquiring customers”. It didn’t mention about mileage incurred to see construction progress. I am not sure if this mileage can be included in start-up costs.

Thank you everyone for your help. I really appreciate. Happy Memorial weekend! 😊

[Recked]

Does any of the $100k include construction costs? Because that would be separate from start-up costs.
I would assign start up costs to an other asset account on the balance sheet.
You can do monthly journal entries to depreciate/amortize but I would probably wait until year end and do one entry once you know the total start-up costs.
As far as the mileage and travel. Depends on goals and income levels etc. If the entity starts producing income and shows a profit in 2018, you might be more inclined to expense the travel.

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