Can I as a start-up founder also use tax depreciation?
July 4, 2024 | 40,00 EUR | answered by Karl Albrecht
Dear tax advisor,
my name is Max Pohlmann and I am about to start my own business. I have extensively researched the topic of starting a business, but I am unsure if I can also use tax depreciation as a new entrepreneur. I want to make sure that I take advantage of all tax opportunities to optimize my financial situation.
I am currently in the planning phase of starting my business and have already made investments that qualify as acquisition costs for my company. I would like to know if I can depreciate these acquisition costs for tax purposes and how exactly that works. I am also interested in what depreciation options are available for new entrepreneurs and if there are any specific requirements to consider.
My concern is that I may not fully utilize tax benefits and therefore have unnecessary financial burdens. Therefore, it would be very helpful for me if you could explain to me in more detail how I can use tax depreciation as a new entrepreneur and what steps I need to take.
I look forward to your expert advice and thank you in advance for your support.
Sincerely,
Max Pohlmann
Dear Mr. Pohlmann,
Thank you for your inquiry regarding tax depreciation for start-ups. It is understandable that you want to ensure that you are maximizing all tax opportunities to optimize your financial situation. I am happy to explain to you in detail how you can utilize tax depreciation as a start-up.
As a start-up, you can generally depreciate the acquisition costs of your business for tax purposes. Depreciation is used to deduct the loss in value of assets over their useful life for tax purposes. There are different depreciation methods, such as straight-line depreciation or declining balance depreciation.
Straight-line depreciation is the most common method, where the value of an asset is depreciated evenly over its useful life. Declining balance depreciation, on the other hand, allows for higher depreciation in the early years to account for the greater loss in value.
To take advantage of tax depreciation, it is important that the acquisition costs for your business are clearly defined and documented. This includes investments in machinery, vehicles, office equipment, or software. You can then depreciate these acquisition costs over their useful life and claim them for tax purposes.
It is advisable to seek advice from a tax advisor to ensure that you are maximizing the tax depreciation opportunities. A tax advisor can help you calculate the depreciation correctly, check the requirements, and maximize any potential tax benefits.
Overall, it is important to address tax depreciation early on to avoid financial burdens and make the most of your tax opportunities.
I hope this information is helpful to you and I am available for any further questions.
Best regards,
Karl Albrecht, Tax Advisor
