Deducting business startup costs

The first year running a new business can be rough. But the rewards for all your hard work include the satisfaction that you’ve transformed your dream into a reality — plus, you can deduct certain startup costs on your federal tax return. Here’s how:

  • Deduct up to $5,000 of business startup and $5,000 of organizational costs (for establishing a corporation or partnership) in the year your business begins operating.
  • Reduce the $5,000 organizational cost deduction dollar-for-dollar by the amount that your startup or organizational costs exceed $50,000. Authorize any remaining costs over 180 months.
  • Include eligible costs incurred researching a new business or acquisition, creating a business, and engage in a for-profit activity in anticipation it will become an active business.
  • Don’t forget about market research, advertising, professional advisor fees and costs related to training employees. They generally qualify.

Additional rules and limits apply. Contact us for more information about startup business deductions.