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Q: Small business accounting ( Answered,   0 Comments )
Subject: Small business accounting
Category: Business and Money > Accounting
Asked by: curlygirly-ga
List Price: $10.00
Posted: 09 Mar 2005 02:28 PST
Expires: 08 Apr 2005 03:28 PDT
Question ID: 487595
For a small business should the cost of developing the logo and
website be considered an asset in accounting terms and therefore
depreciated/amortised? The website is not used directly to generate
income. I have been told that well-known international brands (e.g.
Sony) would consider their logos/websites as assets, because income is
generated purely through the name, but for a small business it can be
considered as an expense written off in one year. I've also been told
that they MUST be considered assets so am somewhat confused.
Subject: Re: Small business accounting
Answered By: taxmama-ga on 14 Mar 2005 07:17 PST
Dear Curly Girl,

When the large corporations create logos, it costs then
thousands or 10s of thousands of dollars to design and
test them and to trademark them in several categories.

When you create a logo, it can cost you as little as $25.00
at - and they do a really good job. 

Or you can pay another $45 - $85 and get a more complete 
package, including camera ready art for stationery, etc. 
(Though, a small business can simply paste that logo into 
their word processing software and create your own stationery.
Just print your letters and envelopes on good paper and
it will look like real stationery. 

So, if you're going to spend that little, you might as well 
just expense the cost as an office supply or advertising cost.

However, if you do pay hundreds or thousands of dollars for
a logo and package that you will use for the life of your 
business, you would amortize it evenly over 15 years - 
that's 180 months, from the date you paid the bill. 

To the cost of the logo, you would add the cost of trademarking it.

Again, the cost of trademarking one logo, in one category...
I'd just write it off. But if you're going to trademark 
several versions of the logo or in more categories, you're
running into money. 

Remember, your goal, for tax purposes, is to deduct as much as
possible, as soon as possible, to reduce your profits.

Stretching expenses over 15 years (intangible assets, code section 197),
gives you not only a tiny deduction each year, but the responsibility of
remembering to use that deduction for the next 15 years - even when you
change software or tax professionals. 

Good luck with your new business.

Your TaxMama-ga

P.S. You can find other people who create logos by searching 
Google for 'design logos'. I just happen to know these guys'
work for several years and have been impressed with their designs.
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