Costs incurred before starting a business


In May this year. I am going to start a business and I have decided to settle costs using the simplified method. However, in April, I bought the first products that I will use in the company for resale and advertising services for the promotion of the company. And here my question arises, will I be able to book the costs incurred before starting the business after starting it?

Stanisław, Warsaw


There are no contraindications to include in the records the costs incurred before starting the business. However, such expenses must meet certain conditions.

In order to be able to include expenses as corporate costs, they must meet the definition of tax deductible costs, which is set out in Art. 22 sec. 1 of the PIT Act. According to its wording, tax deductible costs are expenses incurred in order to achieve income, preserve or secure the source of income, unless these expenses are listed in Art. 23 above the law.

Therefore, there are no obstacles for the expenses incurred on advertising the company and goods purchased for resale to be included in company costs, as they are generally related to the achievement of income.

Moreover, operating expenses may include expenses that are not of a personal nature and will be properly documented and justified. The accounting voucher, on the basis of which it will be possible to classify the expenditure as company costs, should contain at least the following data:
- specification of the type of accounting document and its number,
- providing the parties to the transaction (details of the buyer and seller),
- the date of the transaction and the date of issue of the document, if different from the transaction date,
- specification of the subject of the operation and its value. Products purchased before commencement of operations with a view to their resale should be introduced to the company on the basis of the initial inventory. The inventory should contain at least the information specified in Art. 28 sec. 2 of the regulation on keeping a tax book of revenues and expenses, and these components should be valued at the purchase price, acquisition price or market value (if it is lower than the purchase or acquisition price). On the other hand, other expenses, which did not concern the purchase of goods or fixed assets, incurred in order to start operations, may be recognized directly in the KPiR on the basis of the collected purchase documents, which is confirmed by the position of the Director of the Tax Chamber in Bydgoszcz in the individual interpretation of April 17, 2015, ref. . ITPB1 / 4511-64 / 15-4 / WM, in which we read:

(...) costs indirectly related to revenues are recognized as tax deductible costs on the dates on which invoices (bills) or other evidence constituting the basis for posting (recognizing) the cost were issued.

At the same time, expenses for which the date of issuing an invoice (bill) or other proof fell on the period preceding the commencement of business activity, should be included in the tax book of revenues and expenses - in the first month of non-agricultural business activity.

To sum up, there are no contraindications for the taxpayer to record the costs incurred before starting a business, if they meet the definition of tax deductible costs and the expenses are properly documented.