neurosphere wrote:Downloaded the book, read it all. It was very timely for me. VERY readable, I like the style a lot, and I learned a lot!
I have a question if you don't mind, regarding deductibility of startup costs which was not address in the e-book.
I currently have a side business, a non-incorporated sole practitioner with spouse as employee, doing some freelance medical writing. It showed a profit for 2012 and will do so for 2013. Suppose I want to add an additional side business doing something different. Can I deduct my exploratory costs (research, software, licensing, marketing, attorney's fees, etc) in the year they are paid even if the new business is not yet started? <snip>
That's a good question. And here's what I think (though we'll maybe see if some other CPAs weigh in with other ideas)...
I think because you're a sole proprietorship that you're often pretty limited. You'd need to file a Schedule C for each business according to this instruction in the Schedule C guidelines, "If you owned more than one business, you must complete a separate Schedule C for each business"...
That means, IMHO, that your second sideline business potentially gets entangled in the startup expenditures rule if second venture can't be described as being part of the first business's activity.
However, that said, I would also guess that in many cases one might be able to treat both businesses as the same one. E.g., you probably can't combine a writing business with some other ventures that's *totally different* like gem mining.
But I also think you can combine stuff in many logical ways. E.g., a writing business and an editing business could be combined in my mind as a publishing or content business that provides writing and editing services. Or a writing business (where maybe you're partially writing content for websites) could maybe be combined with a informational website that's also about content and web publishing, etc.
Hope that helps. I think you're right that you want to look at ways to use the first business to provide relief from the second business's startup expenditure limitions. And you might be able to create a business activity definition that includes both your first "product" or "service" and also your second product or service.