Two of the most challenging times of running a business are, perhaps, the start-up and close-down phases. Taxwise, there are certain opportunities that should not be overlooked.
For further information, see IRS Publication 583, Starting a Business and Keeping Records.
When you start a business of any kind, whether a full-time or part-time one, you need to make certain choices. Here is a checklist of the elections, choices, and decisions to make when commencing a business (the chapter in which the item is discussed is also noted):
Type of entity (Chapter 1). Should you incorporate? Form an LLC?
Tax year (Chapter 2). Should you use a calendar year? A fiscal year (and which fiscal year)?
Accounting method (Chapter 3). Should you use the cash method? Accrual method? Some other method?
Investing your own resources. When you add money or property to a start-up, are there any immediate tax results to you? To the business?
Financing (see below). If you need more money beyond what you can add, should you borrow money to start up? Should you ...