Tax treatment of small companies with startup cost that failed to start up.

• In Event: SESSION 2C: Taxation

Abstract

The Small Business Administration posits that 60 percent of small businesses fail within the first five years. A literature review revealed limited research on tax issues for small companies with start up expenses that failed to start making this a baseline study. Startup expenses include operating costs that are incurred after the formation of entities but before they begin business. Such costs include but are not limited to marketing surveys prior to conducting business, pre-operating advertising expenses, costs of establishing an accounting system, cost incurred to train employees before business begins, and salaries paid to executives and employees before the start up of the business. The purpose of this study is to provide information that may be useful to small business owners. Although this study may not help in assessing the failure rates or survivability of business, it assists in providing well needed tax information to small business owners regarding tax benefits after failing to go into business.

Author

• Linval Frazer, SUNY Old Westbury