How much of the capital invested in a franchise is deducted?
I have been doing research on the tax deductions that associate with the capital necessary to start and run a franchise. I am familiar with the Schedule C, but, am not sure how much I can depreciate each year on my taxes.
Let me start by giving you the same caveat that you've probably heard lots of times--for accurate tax advice you need to talk to your own professional tax advisor who is familiar with your own unique circumstances in life and business. Having said that, as a general rule, most of what you spend on a franchise business is going to be deductible from your taxes--either immediately or over time.
When you spend money on an item in the business that is an expense of the business (like your monthly rent or advertising, etc.) then you'll typically be able to deduct all of that type of expenditure immediately. If the capital you invest in your business is for an asset (like a franchise fee or an equipment purchase, etc.) then you will typically deduct this expenditure over time by either depreciating or amortizing the asset value.
The difference in how you classify an expenditure (and therefore on what terms you are able to deduct it) can make a big difference in how much and when you owe in taxes. This is why consulting with an expert on these types of decisions is well advised.
When you spend money on an item in the business that is an expense of the business (like your monthly rent or advertising, etc.) then you'll typically be able to deduct all of that type of expenditure immediately. If the capital you invest in your business is for an asset (like a franchise fee or an equipment purchase, etc.) then you will typically deduct this expenditure over time by either depreciating or amortizing the asset value.
The difference in how you classify an expenditure (and therefore on what terms you are able to deduct it) can make a big difference in how much and when you owe in taxes. This is why consulting with an expert on these types of decisions is well advised.