Moving a business

[SunTaxMan]

Not "start up" - literally "moving" an existing, ongoing business from

one location to another. Move involved moving equipment, new sign -

"normal" expenses involved in relocating.

Distance involved - 1 mile, but I am not sure that is significant to

the question.

Question - capitalize or expense?

I realize that some of the components of the move are capital

expenditures, e.g., leasehold improvements, sign, but other items I

have some question, e.g., employees used (on payroll) to move

equipment, tear down and set up; company vehicle for transport.

[PapaJoe]

I think you have the right idea -- capitalize leasehold improvements, etc. in the new location. Everything else, employee wages, use of company vehicle, etc. is an expense. Don't forget to write off any leasehold improvements abandoned at the old location.

[Julie]

I agree....it's not a situation that I've encountered before, but it's one that I'm dealing with next year, since I'm moving my own business this month. But I don't have any employees, and the biggest expense will be storage rental.

I think you have the right idea -- capitalize leasehold improvements, etc. in the new location. Everything else, employee wages, use of company vehicle, etc. is an expense. Don't forget to write off any leasehold improvements abandoned at the old location.

[OldJack]

I agree that you have the right idea! Capitalize those expenses you would ordinarily capitalize and expense all other. Storage of business materials is a business expense.

[Catherine]

Not "start up" - literally "moving" an existing, ongoing business from

one location to another. Move involved moving equipment, new sign -

"normal" expenses involved in relocating.

Distance involved - 1 mile, but I am not sure that is significant to

the question.

Question - capitalize or expense?

I realize that some of the components of the move are capital

expenditures, e.g., leasehold improvements, sign, but other items I

have some question, e.g., employees used (on payroll) to move

equipment, tear down and set up; company vehicle for transport.

You've got it and other posters have expanded beautifully. Had a client who moved in late '06. We capitalized leasehold etc items; all else was expensed. Most in '06, a few things lingered into '07 (new place, for example, has a bigger lunchroom sink, so they got tons of little things once they were well settled - dish drain rack, paper towel holder, soap dispensers, plastic forks, and the like). More desks and computers for new employees (the expansion necessitated the move) were not considered part of the move and were dealt with separately.

I found it useful to initially have their bookkeeper enter _everything_ into QuickBooks in a new category I made and called "moving". That put all the "possibles" in one place, where I then sorted and re-characterized them at my convenience.

Catherine