Starting a biz: What you can write off
You don't get a tax break on money you borrow – but the interest you pay on your loans is fair game for deduction.
Bryanne Goetz, Orlando
I started a business from home this year. Can I write off the money that was loaned to me to start the company?
By Lenora Chu, CNNMoney.com contributor
You cannot write off money that was loaned to you. However, you can deduct the interest that you pay on the loan, says Martin Chan, a CPA of Philadelphia.
You can also claim any business expenses that may have been covered by the loan, such as office supplies and utilities, says Fullerton, Ca.-based CPA John Stoller.
In order to qualify as a tax deduction, these expenses must be considered both “ordinary” and “necessary,” says Chan. In other words, they must be common and accepted in your industry, and also helpful and appropriate to your business.
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From Alex N While a loan is not something you can write off – you can write off almost all the expenses that your business incurs in the course of its daily operations and yes of course the interest that you pay on that loan! Save those receipts!
Alex N
http://www.smallbusinessplanresources.com
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Make sure to first consider how you obtained financing for this business. In other words, if you used personal collateral then it may be harder to make the connection.
This is why small business owners are often encouraged to keep personal and business credit/finances separate.
Sincerely,
Ilya Bodner
Small Business Owner
Initial Underwriting Group