What are “Start-Up” costs?

To the IRS, qualified start-up costs are those expenses that a business incurs while in the process of determining whether or not to start a new business, and which new business to begin.  This is often called the “whether or which test”.  See IRS Rev. Rul. 99-23, 1999-1 CB 998. Any expenses incurred after this decision is made are not considered part of the search and decision-making process, but are assumed to be used to consummate the transaction, and therefore they must be capitalized.

Start-up expenses are fully deductible up to $5,000, with any additional balance amortized over a period of 180 months.  Taxpayers make an election to amortize start-up expenses by attaching a statement to the initial tax return of the business.

About the author  To change this standard text, you have to enter some information about your self in the Dashboard -> Users -> Your Profile box. Read more from this author

• Assess Your Abilities and Resources Because starting your own business is a risky thing to do, it is important to come to grips early on about the potential risks you face.  By facing those risks head-on, you can make an informed decision about whether or not you are willing to accept those risks.  It also......
• Five Essential Leadership Traits You Need When Times Are Tough I don't have to tell you how turbulent the last couple of years have been.  We've seen the impact of the economic environment on entrepreneurism in a big way over the last 18 months.  On the bright side, I am seeing that businesses startups today  - and those existing businesses......

• H&R Block Opening Accounts for Refund Anticipation Loans
• How We Track Expenses - The Lifecycle of a Sales Receipt In Our Household