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Small business startup costs

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  • Small business startup costs

    Hi all,

    Can a small business deduct the expenses that were incurred before the business became operational? For instance, I have set myself up as a sole proprietor for an IC job for which I will be paid on a 1099. I have not started yet but am incurring some costs already- fees for hospital privileges, professional organization membership, registration for conference attendance (for review courses, coding and billing seminar).

    Do these fall under startup costs or business expenses and can they be deducted from business income when it comes time to file taxes next April?

    Thanks a bunch!


  • #2
    Yes, you can elect to deduct up to $5k of startup costs and $5k of organization costs, but only if the total does not exceed $50k. The balance has to be amortized over 15 years. You don't get to make the classification on a basis of what you would like it to be, but whether it is a true startup cost or a cost of doing business. See chapters 7 and 8 of IRS Pub 535 for more.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      Thank you so much Johanna, for pointing me to the IRS links!