Registering a new trademark with the USPTO costs money. When you add up the filing and lawyer fees, it could be thousands of dollars. You must report these business expenses on your balance sheet. The tax amortization periods allowed in Malaysia for intangible assets are explained by the Ministry of Finance [1] and only apply to trading companies where at least 60% of the issued share capital is held by Malaysians. [2] Investments in the acquisition of intellectual property rights such as patents, designs/trademarks are allowed as a deduction of 20% of the acquisition costs of property rights for 5 years. Technology assets, including software, can be depreciated for tax purposes in 2.5 years. Goodwill and other intangible assets are not tax deductible. Jared is a sole proprietor who recently launched a new mobile gaming app. To protect its trademark, it has registered a trade name and trademark for its application. Including design, legal and filing costs, he spent $30,000. Since its brand and business name are considered intangible assets, Jared would have to write off the $30,000 over 15 years and deduct $2,000 ($30,000/15 years) each year while it prepares its taxes (note that if its business name and brand were activated in the middle of the taxation year, its deduction for the first and last year may be less than $2,000). You can`t deduct the cost of building your brand, but you can apply it to your “income tax base” wording, which is the benchmark for determining the tax payable on sales and depreciation deductions.

You need to factor these brand expenses into your company`s balance sheet. Note the useful life of the mark of ten years. You must account for renewal costs every ten years to keep the registration active. To properly capture this sale, you need to perform a separate brand evaluation. Then, record that revenue from sales in your accounting records. Report your profits from the sale of the brand to your income taxes. For example, let`s say you spend $10,000 to design and register a trademark. You can`t deduct that from your taxes. Instead, add that to the brand`s tax base.

If you later sell the brand for $15,000, subtract the $10,000 to make a profit of $5,000. That $5,000 is what you report as business income for tax filing purposes. This short guide will give you a quick overview of how your brand affects your taxes and finances. Instead of registering a brand new trademark, you may decide to buy an already established trademark. There are two separate exams that you need to consider. There`s the actual company and then there`s the brand. Once you have your trademark, you need to know how to declare that asset. Because it is an intangible asset, there are special rules about how you report it on your balance sheet and income tax. A trademark is the key to protecting your intellectual property and the success of your business. However, this is not just a simple registration.

You need to know how to manage these expenses and the potential gains from this intangible asset. If you pay franchise, brand or business name fees, these costs are generally considered deductible business expenses. Entrepreneurs starting brand new businesses may incur trade name or trademark fees if they attempt to uniquely identify their business and/or products. Entrepreneurs who acquire the right to operate an already established business may incur franchise fees. Business name, trademark and franchise fees are all considered intangible assets under section 197, which are generally deductible over a fifteen-year period. There may come a time when your brand is so well-known that someone approaches you to buy it. You are interested in buying the recognition, reputation, and goodwill you have developed for your brand. This means that you must sell the trademark that protects your ownership of that trademark. Approximately 7 million trademark applications are filed each year.

If you have intellectual property related to your business, you will probably also need to register for trademark protection. Anna is a graphic designer who registered a new trademark for her company in January this year. She paid $7,500 for her brand. As this was a legitimate business expense, she informed her tax advisor that she wished to deduct the costs in Schedule C. His accountant told him that instead of deducting the full $7,500 this year, she would have to write off those expenses over 15 years, so he filled out Form 4562 (amortization plan) and deducted $500 ($7,500/15 years) from his current year in Schedule C. Working with an experienced team of financial advisors ensures you declare ownership of your brand. Buy and sell well. They can also advise you on best practices to ensure proper tax preparation. The corporations and corporations eligible for such a deduction are: An experienced financial or tax professional can help you with these calculations. Karen, a photographer who recently moved to California.

To quickly acquire a business book, she signed a 15-year franchise deal with Hollywood Design and Photography in January. Karen paid a one-time franchise royalty of $12,500 and agreed to pay Hollywood an additional 4% of her net income each year. When Karen prepares her tax return, she would have to amortize the $12,500 franchise fee over 15 years and fully deduct her contingency expenses. b) A manufacturing, manufacturing and agro-industrial company based in Malaysia and at the end of the reference period for one year of evaluation Be sure to separate the cost of registration and maintenance from the cost of promotions. Your marketing and advertising costs are considered operating costs and should not be included on your balance sheet. Paolo is an independent real estate agent who has been travelling alone for five years. Earlier this year, he paid $450 to acquire a business name to make his business more professional. Pablo`s accountant told him that although the trade name is not expensive because it is an intangible Section 197, the IRS requires him to recognize the cost of his business name over a fifteen-year period. Jamie is a sole proprietor who owns a small lawn and garden mowing business.

Recently, Jamie decided to become a franchisee of Ace Lawn Mowing to expand his territory. The terms of the franchise agreement require Jamie to pay a percentage of his income to Ace for five years (the amount is essentially the same annually). Since Jamie`s deductible payments could be considered conditional, he is entitled to deduct these quarterly franchise fees in full each year on line 23 of Schedule C. From the 2010 tax year to the 2014 tax year, certain companies may claim tax deductions on taxes or payments made for filing patents and/or registering trademarks under the Malaysian Patent Act 1983 or .dem Malaysian Trademark Act 1976.