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Frequently Asked Questions on Buying and Selling Businesses 1. After I buy my business, what form do I file to apply for an Employer Identification Number ( EIN ) ? File Form SS-4. Ask your local CPA for a copy of the form or you may download the form from the IRS web site or you may call the IRS and apply over the phone.
2. Am I responsible for the prior businesses debts after I buy the business ?
3. Are some business locations better than others ?
4. Are there companies that provide search services to ascertain if a new company name will infringe on an existing name or trademark ? Amortization for Acquisition Expenses No amortization for acquisition expenses incurred after purchase decision is made. Business startup expenses may be written off (amortized) over a period of 60 months. These expenses include costs of investigating the creation or purchase of an active business. The IRS recently ruled that expenses incurred in an attempt to acquire a specific business don’t qualify as startup expenses and therefore aren’t eligible for the 60-month write-off. The dividing line is the point at which the taxpayer decides whether to enter a new business, and which new business it will enter or acquire. Costs incurred after these decisions have been made must be capitalized (that is, they are not eligible for 60-month amortization) even if a legally binding obligation to acquire another business does not yet exist.
Starting a Small Business and Keeping Records The Department of Treasury offers free to Small Business Offers "Starting a Business and Keepng Records". This file is available as a PDF download at the following address: Download Publication 583, Starting a Business and Keeping Records
Download Publication 509, Tax Calendar for 2000
Small Business Planning Well thought out business plans cannot be emphasized too strongly. The achievement of your goals and objectives depend on it. Funding, credit and costs for promoting your business must be included. You should also include in your business plan the following: Preliminary budgets and projected profit and loss statements An analysis of the current marketplace situation; Objectives and goals relating to sales, market share and profits; Customers you have targeted and plans to reach them. Business plan should be thoroughly prepared, because a sloppy, poorly thought out plan minimizes your chances for outside funding. While planning your business, it is critical to plan how much cash you will need. That amount depends on the type of business you are opening and the type of person you are. Ask yourself what you need the money for; how much you need; does the amount allow for unexpected developments; how and when you will repay the money; can you afford the cost of borrowing; and what is the outlook for business in general and your business in particular? As one business owner has said “It’s tough to start out on your own, get a CPA on your team as soon as possible. Many small businesses have come through his office and his experience can help you start off on the right foot. The Gain Exclusion on Residence Sales and When to Put Real Estate Into a Business First, a few words about the definition of a residence for tax purposes: For purposes of deducting mortgage interest, a personal residence is the taxpayer's home, and one other residence selected by the taxpayer. The second residence must have sleeping, lavatory, and cooking facilities. Therefore, a boat or camper are two examples of possible second residences that you can use for deducting mortgage interest.
HOW THE GAIN EXCLUSION WORKS Starting A Business Starting a business - it seems basic and easy, but items are often overlooked. To protect your assets, you should consider the form of the business. Choices include a "S" or "C" Corp, or a LLC. This is very important and should be well thought out , since no one knows what the future can bring. Why take a chance, any chance, that can result in the lose of the items you have worked so hard for.
Okay we're going into business - so the question is…how should it be structured? It should be something with no liability to the stockholders, assuming, of course, that it's not a professional corporation. In some states one can accomplish that with an LLC. Another option is to incorporate. However, check the regulations in your state, since they are not all the same. If you incorporate, make sure your attorney enables the stock to yield ordinary losses, not capital losses.
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• Publication 334 Tax Guide for Small Business
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