Preparation costs: Before officially opening your doors, you’ll likely spend money on traveling, advertising, wages, or employee training.The IRS divides eligible startup costs into three different categories: Any startup expenses you can't currently deduct have a 15-year amortization period (or a length of time allowed to write off expenses) from the first month you begin business. If you’ve officially started a business, you’re entitled to deduct specific startup costs and business expenses from your tax return. We'll dig into how much money you need to start a business and resources to help you budget for your first year of business. In fact, when we polled 700 small-business owners, more than 50% said they underestimated how much they’d have to spend during their first year of business to make money. And unless you have thousands of dollars of ready cash, this means you’ll probably need to take out a personal loan or turn to crowdfunding, credit cards, or alternative lenders to acquire enough capital to start your business (and start making money).īut the amount of money you need to start a business isn’t always clear. Well, for better or worse, most first-time business owners have to use their own money to launch their companies. So how are new business owners supposed to start making money without qualifying for a business loan? But along with a business license, most traditional lenders require proof of revenue before they’ll agree to a loan. When it comes to small-business ownership, you really do have to spend money to make money - which is why small-business owners often apply for loans from traditional lenders to get their businesses off the ground.
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