Can I deduct what I spent before opening?
Partly. IRC §195 allows up to $5,000 in the year the business begins, reduced dollar for dollar once start-up costs pass $50,000; the rest is deducted over 180 months.
Bookkeeping for a new Utah business
Excite Tax's first-year bookkeeping for new Utah businesses starts with IRC §195: up to $5,000 of startup costs is deductible, phased out above $50,000.
Short answers
When do I choose cash or accrual?
On your first return. IRS Publication 538 says you choose an accounting method when you file your first tax return, and changing it later generally needs IRS approval.
Do I need a separate bank account?
Yes, before the first sale. IRS Publication 583 puts opening a business checking account, kept apart from your personal one, among the first things to do.
What do I register for in Utah before payroll?
A withholding account. The Utah State Tax Commission issues withholding numbers through Taxpayer Access Point, on the TC-69 application.
Set up the books before the first sale
- Open the business bank account and card, and run nothing personal through them.
- Keep every receipt from before opening in one place; §195 needs the total.
- Build a chart of accounts that maps to the lines of the return you will file, so the books total to the return without reclassing.
- Decide cash or accrual before the first return, because that return makes the choice.
Start-up costs, in the statute's words
$5,000, reduced (but not below zero) by the amount by which such start-up expenditures exceed $50,000 ... the remainder ... ratably over the 180-month period
Worked through: a business that spent $52,000 before opening can deduct $3,000 in its first year ($5,000 less the $2,000 over the $50,000 line), and spreads the other $49,000 over 180 months. At $50,000 or less, up to $5,000 (or the full cost, if smaller) is deductible in the first year; at $55,000 or more, none of it is.
The first year in Utah
In Utah, the first payroll needs a state withholding account, applied for through Taxpayer Access Point (TC-69), and a withholding return every quarter on the TC-941E schedule. Set the payroll accounts up in the books before the first paycheck, not after the first return.
Questions that depend on the entity
When is a new S corporation's first return due?
By the 15th day of the 3rd month after its first tax year ends, so books for a company formed in the spring still close at December 31 for a calendar-year company.
When is a new multi-member LLC's first partnership return due?
Form 1065 is due by the 15th day of the 3rd month after the tax year ends, and each partner's share comes from the same books.
What changes in the books with the first employee?
Payroll adds liabilities the books must track: the employer pays 6.2% social security and 1.45% Medicare on top of wages, and Utah withholding is due each quarter on TC-941E.
When to hand this to a preparer
Hand the books over when keeping them costs more hours than the business can spare, or when they stop agreeing with the bank.
Excite Tax keeps these books; the return they feed is reviewed and signed by a licensed CPA at TBD CPA LLC.
Sources
- 26 U.S.C. § 195, Start-up expenditures · retrieved September 2026
- IRS Publication 538 (01/2022), Accounting Periods and Methods · retrieved September 2026
- IRS Publication 583 (12/2024), Starting a Business and Keeping Records · retrieved September 2026
- Utah State Tax Commission, Withholding Tax · retrieved September 2026
- IRS, Instructions for Form 1120-S (2025) · retrieved September 2026
- IRS, Instructions for Form 1065 (2025) · retrieved September 2026
- IRS Publication 15 (2026), (Circular E), Employer's Tax Guide · retrieved September 2026
Ranked and explained on the sources page.