Yes. Even though you had no income you can still prepare a Schedule C for your business (if you are a sole proprietor). You can deduct any startup costs and regular business expenses you may have incurred (even if there is no income). Startup costs can only be deducted in the year they were paid (for a cash basis business).
You can deduct up to $5,000 of startup costs as a current business expense. The remainder is amortized over 180 months.
Start-up costs include:
- Survey of potential markets
- Advertising the opening of the business
- Consulting or other professional fees paid in connection with starting the business.
- Wages to employees being trained for the new business
- Analysis of possible facilities, labor force, supplies, etc.
- Travel and related expenses to secure distributors, suppliers and customers.
You can enter your startup expenses using these steps:
- Click on Income and Expenses and then click the Start/Revisit box in the Self-Employment section.
- On the Your 2020 self-employed work summary screen, click on Edit next to your business.
- On the Here's your [business] info screen, click on the box Add expenses for this work.
- On the Tell us about any expenses screen, click the radio button next to the most appropriate category for this payment -- Commissions, Contract Labor, etc.
- After making your selection(s), click Continue when done. TurboTax will walk you through the data entry.
Once you have finished entering your startup costs you will be brought back to the Here's your [business] info screen. Click the box Add expenses for this work, so to enter other expense categories.
NOTE: If you don't see Startup costs in the list of Business Expenses you need to indicate that the business was started or acquired in 2020. Please follow these steps:
- Click the Edit box next to General Info
- Click Edit next to General Info (On the again).
- On the Tell us about how long you've worked in [XX] mark the box I started [business name] in 2019 and enter the date you started or acquired this business.
- Click Continue and then Looks Good to get back to the Here's your [business] info screen.
