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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 2309
Experience:  Certified Public Accountant
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I have been getting loans from people to help my company

Customer Question

Hello, I have been getting loans from people to help my company survive (paid some operational expenses) because I am just starting and the business does not generate the cash needed, I have also used that money to pay deposit of leases for future locations, so, if I am using that money to pay expenses then those expenses are being shown in my P&L and my P&L looks pretty bad with a lot of losses, is there a way I can classified those "expenses" that I paid with those loans as an "asset" because practically I think they could be considered as Startup Investment?, Startup investment??, in that way those will not be reflected in my P&L.... I am asking this because I am trying to get a big loan but they are telling me that I need to classify what I am paying with the loans in another way to not affect my P&L.. how can I do that?
Submitted: 1 year ago.
Category: Finance
Expert:  Mark Taylor replied 1 year ago.

Hi, my name is Mark. I will be happy to help you with your questions. When did you begin operations? Have you started generating revenue (sales)? What type of expenses are these?

Customer: replied 1 year ago.
Hello these are four restaurants, one started on July 2015, other Dec 2014, other Dec 2015 and the last one Jan 2016, they have been already generating sales from 25k-40k, I have used the money I got from loans to help me to pay rents, utilities, payroll, sales tax, insurance, equipment, legal permits and licenses.
Expert:  Mark Taylor replied 1 year ago.

From your list of expenses the only amounts that you would capitalize would be the equipment.

Start-up costs include amounts paid for the following:

An analysis or survey of potential markets, products, labor supply, transportation facilities, etc.

Advertisements for the opening of the business.

Salaries and wages for employees who are being trained and their instructors.

Travel and other necessary costs for securing prospective distributors, suppliers, or customers.

Salaries and fees for executives and consultants, or for similar professional services engaged in the formation and structure of the entity.

Customer: replied 1 year ago.
ok then start-up costs would be a current asset?
Expert:  Mark Taylor replied 1 year ago.

The start-up costs would be a capitalized asset (intangible asset). You would be able to deduct up to $5,000 of start up costs in the initial year by making an election. Amounts in addition to $5,000 would be amortized over 15 years. If the amounts are above $50,000 the $5,000 of initial deduction would be reduced.