Invested Money in Small Business as Partner - Tax deductions possible?

Question

I invested 3K in start-up money with 2 other guys plus spent another 4K in misc. such as travel costs, supplies, etc. and we haven't taken a salary or any income and are actually barely breaking even. Can I get any tax benefits for my personal income tax by having invested in this business?

Thanks.

LLC is the entity. Will not be changing that. I also live 2 states away and will not be able to just go see a tax pro together with the 2 other partners. The solution will have to be individually solved for each of us. They both have multiple other businesses it is just not going to be us going to see the same personal accountant.

Thanks.

This is about my personal taxes, not the LLC which will be done by the company's CPA. I will get a K-1 at the end of that process? I also don't do my own taxes. I'm trying to figure out if a. I can take deductions and b. what I need to give to my accountant to get the deductions and c. what are the questions I should be asking my partners prior to doing my own personal taxes. So far it looks like I should be asking to see a Schedule K-1.

Answer 1

I agree with the above post. This is not something that you want to tackle on your own.

Though partnerships do not pay taxes (their owners do), a partnership tax return must be also filed for 2006. You will probably need a profession to handle this. You and the other owners will receive a "K-1" that will show your share of profits (if any) and deductions.

Answer 2

Cost of Goods Sold. Same thing as Inventory Costs. Seek professional assistance to set things up for taxation. People who wait til they're already in business to figure out the tax situation always end up with a big mess on their hands. Get your tax situation under control before you start, keep it that way, and avoid big messes and headaches. Call around to a few places to get an idea of price and experience. A CPA could certainly help, if they're a tax specialist, but you could also get good help from an Enrolled Agent, usually at a much lower cost.

Answer 3

In a word, yes. However, I'm not going to spend an hour discussing what you need to do - the three of you need to visit a competent tax professional to discuss the most advantageous type of business entity for your situation.