Page 40 - Keeping Business Records

Business Start-Up Costs (2/5)

Start-Up Costs

• Business start-up costs are the expenses you
incur before you actually begin business
operations. Your business start-up costs will
depend on the type of business you are
starting. They may include costs for
advertising, travel, surveys, and training.
These costs are generally capital expenses.
• You usually recover costs for a particular asset
(such as machinery or office equipment)
through depreciation (discussed next).
• You can elect to deduct up to $5,000 of
business start-up costs and $5,000 of
organizational costs paid or incurred after
October 22, 2004.
• The $5,000 deduction is reduced by the
amount your total start-up or organizational
costs exceed $50,000. Any remaining cost
must be amortized. For more information
about amortizing start-up and organizational
costs, see chapter 7 in Publication 535.

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