business tax question by YES MAN: Is revenue going back to start/buy another business tax deductible?
say i have a 100k revenue from my current biz for the year. can i use part of the money, like 30k to start another business, or buy another business, and called it as expense and is it tax deductible?
is that how the rich get richer? by continuing starting biz and increase revenue and decrease taxable income?
or can i create a new business name and put two businesses under it? so i can claim two different biz expense as one?
business tax best answer:
Answer by beached42
The $ 30K would be used for the purchase of stock for the next company. Equity contribution is just that equity contribution–it is not deductible by the current biz (unless it was paid as a salary to a principal who then invests it in the new company) and it is not tax deductible.
The rich get richer by investing their money in places when it will continue to grow–with the thought that the riskier the investment the greater the return.
There are many ways to structure your new business. If you have a corporation already, your can set up your new venture as a division of the already formed corporation. If you want the two to be separate, you can create another corporation and have the first corporation own the second. If you want the two to be separate, you, as the sole stockholder, of the first can set up a second corporation and you can own all of the stock.
Perhaps your best place to start is at a good CPA’s who can further give you the pros and cons of each structure. Good luck in your new venture
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