the startups.com platform about startups.comCheck out the new Startups.com - A Comprehensive Startup University
Education
Planning
Mentors
Funding
Customers
Assistants
Clarity
Categories
Business
Sales & Marketing
Funding
Product & Design
Technology
Skills & Management
Industries
Other
Business
Career Advice
Branding
Financial Consulting
Customer Engagement
Strategy
Sectors
Getting Started
Human Resources
Business Development
Legal
Other
Sales & Marketing
Social Media Marketing
Search Engine Optimization
Public Relations
Branding
Publishing
Inbound Marketing
Email Marketing
Copywriting
Growth Strategy
Search Engine Marketing
Sales & Lead Generation
Advertising
Other
Funding
Crowdfunding
Kickstarter
Venture Capital
Finance
Bootstrapping
Nonprofit
Other
Product & Design
Identity
User Experience
Lean Startup
Product Management
Metrics & Analytics
Other
Technology
WordPress
Software Development
Mobile
Ruby
CRM
Innovation
Cloud
Other
Skills & Management
Productivity
Entrepreneurship
Public Speaking
Leadership
Coaching
Other
Industries
SaaS
E-commerce
Education
Real Estate
Restaurant & Retail
Marketplaces
Nonprofit
Other
Dashboard
Browse Search
Answers
Calls
Inbox
Sign Up Log In

Loading...

Share Answer

Menu
Accounting: How should I handle all of my initial startup costs?
DM
DM
Dane Madsen, 35 years of looking for the perfect business. answered:

If you are in the US, the simplest approach is to form a pass-through entity such an an LLC, or a C-Corp with a Sub-S election (a variation on the pass through), where all the losses (and profits) end up on your tax filings. The challenge is that, with the current tax environment in the US (where you have a "standard" deductions) unless these are significant, they will not make much tax difference. If you approach it this way, and pass through the losses, you will not have the benefit of them in the future.

Remember though, once you incorporate, if you have other shareholders, if you are the only person adding cash, it will benefit them all if you are not careful with the accounting. As you add capital to either entity, it increases your cost basis in the shares if you approach the Sub-S version or you can use shareholder "loans" for the LLC that would be repaid from future cash flow.

This is not difficult but you should get an accountant involved early. A corporate lawyer will be valuable in helping you choose the right entity. And keep great records.

Talk to Dane Upvote • Share
•••
Share Report

Answer URL

Share Question

  • Share on Twitter
  • Share on LinkedIn
  • Share on Facebook
  • Share on Google+
  • Share by email
About
  • How it Works
  • Success Stories
Experts
  • Become an Expert
  • Find an Expert
Answers
  • Ask a Question
  • Recent Answers
Support
  • Help
  • Terms of Service
Follow

the startups.com platform

Startups Education
Startup Planning
Access Mentors
Secure Funding
Reach Customers
Virtual Assistants

Copyright © 2025 Startups.com. All rights reserved.