Can we claim purchases for our business prior to being Incorporated?

Question

My husband and I are starting a business. There are obvious expenditures to do such. Do we have to have our LLC set up with the Tax ID Number prior , in order to claim the items we need to purchase?

Or, can it all be within the same tax year? (ie..but items this month and incorporate next month?)

We are going to be making a large investment in items, and want to be able to have the opportunity to claim it all.

Any help would be great!!

Thanks all!!

Answer 1

All expenses incurred before you actually start operating are considered "stat-up costs", and you should keep a record of these.  When you start your business, and file your first tax return, these costs are written off or "amortized" over a period of 180 months, starting from the month you begin operating.  It makes no difference how long before starting the business the costs were incurred.  You will not file a business tax return until you start operating.

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