Start-up costs: quick question

[RockyBalboa]

Hi

Just wondered if start-up costs such as company formation and contract review are claimable as an expense once trading?

Thanks.

[malvolio]

Hi

Just wondered if start-up costs such as company formation and contract review are claimable as an expense once trading?

Thanks.

Yes. Why wouldn't they be?

[RockyBalboa]

I have heard one argument that as the business was not actually set-up, the formation costs and contract review cannot be counted as expenses.

[oraclesmith]

I have heard one argument that as the business was not actually set-up, the formation costs and contract review cannot be counted as expenses.

That's rubbish. By 'claim' I assume you mean that the company can pay for these out of trading income. So long as it is genuine business expenditure aimed at generating future taxable trading income then it can be treated as if expended in the first year of trading. In my opinion.

Just google 'pre-trading expenditure', you'll get lots of advice.

[Gonzo]

I have heard one argument that as the business was not actually set-up, the formation costs and contract review cannot be counted as expenses.

I think that you have heard wrong. Research a little more.

hth

[Cooperinliverp00l]

yes you can i have just done it for Company Formation and Insurance. All done 3 weeks before official commence trading date and a whole 1.5 months before the first money started to appear in company bank.

[Nixon Williams]

Company Formation costs can be paid by the company but the company will not receive tax relief on the cost, this will be "added back" to the profit and so taxed on this amount.

As this should be either free or very little cost this should not be an issue anyway.

Alan

[RockyBalboa]

Company Formation costs can be paid by the company but the company will not receive tax relief on the cost, this will be "added back" to the profit and so taxed on this amount.

As this should be either free or very little cost this should not be an issue anyway.

Alan

Hi Alan,

If the cost is added back to the profit, wont that increase the profit figure?

Thanks.

[Jason D]

He means added back to the tax computation so that tax relief is not given on that amount. The accounting profit will stay the same.