Is a Small Business Plan a deductible expense for a business?
According to the GoSmallBiz.com Resource Center: Legal service costs which are ordinary and necessary costs of doing business are deductible on the tax return of the business in the year incurred, with no dollar limitations. There are exceptions, however, the most common of which are as follows: • Related to the acquisition of a capital asset – must be added to the cost of the asset and written off over its life. • Related to organization of the business – can be written off over 60 months with proper election. • Related to sale of capital stock – considered a cost of raising equity and netted against the equity amount. • Related to loans – must be amortized over the life of the loan Legal service costs for non-business purposes can be deductible if they are directly related to the production of taxable income or incurred in order to report or plan for income taxes. Pre-Paid Legal’s fees for their Small Business Plan are paid by businesses for legal representation of the business.
