Pre-start up costs and tax

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mmclo

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Just wondering if there is anyway to offset pre-start up costs against any tax liability, I thinking of design services and suchlike.

I am also registered as self employed but not in the area of the potential start up, could you adjust self employed registration to cover the possible start up area and then deduct these costs from self employed income?
 
What are pre-start-up costs (as opposed to start-up costs) ? Normally the latter would be costs before you start up ...

And yes, you would normally be able to treat them like trading costs.
 
mmclo said:
Just wondering if there is anyway to offset pre-start up costs against any tax liability, I thinking of design services and suchlike.

I am also registered as self employed but not in the area of the potential start up, could you adjust self employed registration to cover the possible start up area and then deduct these costs from self employed income?
Click to expand...

As far as I'm aware, If you're purchasing certain products and services for a startup company and can prove that they are relevant and necessary to the startup, then your accountant should be able to account for all the purchases/investments as a company director loan which would be repaid by the startup company etc. Needless to say, it all depends on your specific situation, what type of a startup you're forming and what type of costs are being incurred.
 
I'm fresh from making my first tax return under self-employment. I found the Revenue guide "IT48 Starting in Business" very useful... it doesn't seem to be available on the Revenue website but I found it on the Enterprise Ireland website. I can't post a link because I'm a new user but if you google "IT48 starting in business" you'll find it.

Page 11 of IT48 says this about "Pre-Trading Expenses"

"What about pre-trading expenses?

A business, whether incorporated or not, can claim for certain
pre-trading expenses when calculating the trading income. A
deduction is available for pre-trading expenses which:

-Are incurred in the three years prior to commencement of the trade or profession,
-Would not normally be allowable.

Examples of pre-trading expenses are:
-Accountancy fees,
- Advertising costs,
- Costs of feasibility studies,
- Costs of preparing business plans,
- Rent paid for the premises from which the business operates.

The allowable amounts are treated as having been incurred at the time the business commences. Allowable amounts cannot be set off against income other than income from that business but can be carried forward and set against future profits of the business."


When you make your tax return you can have more than one trade, but I don't know if you have to register each trade separately.
 
Very helpful, I'm thinking particularly of material which will help/support a business plan - designs etc

What if you don't go ahead and start up or incorporate...that's life I suppose?
 
mmclo said:
Very helpful, I'm thinking particularly of material which will help/support a business plan - designs etc

What if you don't go ahead and start up or incorporate...that's life I suppose?
Click to expand...

I'm not sure whether this is a product or service based startup but the best way to maximise success is to validate and test your idea to ensure it works, that there's a target market available for it and that enough people within that target market would pay for your product and/or service. If you proceed without this, the risk is yours. This risk can be much more expensive if you proceed to incorporate and it's not as successful as you had hoped. It can be done though and I wish you all the best with your new startup!
 
Revisiting this given the time of year, I think this is the answer I was looking for, no surprise I suppose

"Allowable amounts cannot be set off against income other than income from that business"
 
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