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Start up costs

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  • 10-06-2013 9:22pm
    #1
    ash_18x
    Registered Users Posts: 312 ✭✭


    Hi,
    First time posting in this section!
    My husband set up a business nearly two years ago and we used our own savings to start it up. At the end of the first year of trading the girl in the tax office (doing self assessment as a sole trader) said to write in any start up cost as an expense.
    So say for example he started his business in Sep, took €2k to start, at end of Dec had made €4k, start up expenses and rent etc and all other expenses came to €3k so €1k profit and pay his tax on that. That is all fine but now he has the €2k back in his account that he initially put in, can he take this out? If he can what does it go in the books as?
    Hope I have made sense, as I write I think I am confusing myself.
    Thanks in advance for any advice.


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    #2
    smcgiff
    Closed Accounts Posts: 5,943 ✭✭✭smcgiff


    ash_18x wrote: »
    Hi,
    First time posting in this section!
    My husband set up a business nearly two years ago and we used our own savings to start it up. At the end of the first year of trading the girl in the tax office (doing self assessment as a sole trader) said to write in any start up cost as an expense.
    So say for example he started his business in Sep, took €2k to start, at end of Dec had made €4k, start up expenses and rent etc and all other expenses came to €3k so €1k profit and pay his tax on that. That is all fine but now he has the €2k back in his account that he initially put in, can he take this out? If he can what does it go in the books as?
    Hope I have made sense, as I write I think I am confusing myself.
    Thanks in advance for any advice.

    The €2k he initially put in sounds like working capital. Did he use it to buy stock or something?

    If that's the case it wouldn't be a tax deductible expense.

    The profit should be Sales less Purchases (add back closing stock as not all purchases were sold).


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    #3
    ash_18x
    Registered Users Posts: 312 ✭✭ash_18x


    Hi, no he is actually barber, the money he put in was to buy equipment, chairs and to paint the shop he is renting etc, he doesn't have any stock to sell at all. Sorry I should have made that clear in my initial post.


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    #4
    smcgiff
    Closed Accounts Posts: 5,943 ✭✭✭smcgiff


    ash_18x wrote: »
    Hi, no he is actually barber, the money he put in was to buy equipment, chairs and to paint the shop he is renting etc, he doesn't have any stock to sell at all. Sorry I should have made that clear in my initial post.

    Okay, so this money was used up in the business. When you say he got this money back I guess you mean profit.

    It depends on what the money was spent on. It's likely that the spend on equipment will be considered fixed assets and will need to be offset against income over a number of years. I imagine the painting would be considered repairs and could be expensed in the first year.


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