I created my LLC on Paper in California on 2nd January 2025. I had some start up expenses where I travelled internationally to meet clients and also drove some miles here in USA to start up my business.
Can I deduct those expenses for 2024 year in my current return as the actual expenses were in 2024.
I do agree 5000 is the start up expenses but there were some additional ones that I actually incurred prior to forming LLC on paper.
It was mainly related to meet all the clients, customers, market survey etc.
Please guide.
Usually, a business is considered open when it starts selling goods or services to customers, not when it was registered. Regarding when to claim your start-up expenses, it depends on whether your business was active or not yet during 2024.
Regarding how much you can claim, you can deduct up to $5,000 on the year your business becomes active. The rest can be amortized over a 180-month period that starts on the month the business begins to operate. See the following IRS page for more information on deducting start-up expenses.
Here’s how businesses can deduct startup costs from their federal taxes
Feel free to reach us again if you have additional questions.