cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

I am starting a business in December but will not be operational until January. Would I be able to deduct business expenses from my current year taxes?

Would it be more straightforward to wait until the following January to make all business purchases?
1 Best answer

Accepted Solutions
Level 20

I am starting a business in December but will not be operational until January. Would I be able to deduct business expenses from my current year taxes?

Generally, you can only deduct business expenses from business income.  You deal with your startup costs in the first year your business is "open" and has income.

Startup costs up to $5,000 can be deducted (with certain limits).  Startup costs over $5000 must be amortized over 15 years; startup costs under $5000 can also be amortized if you want to.  See here for more  https://www.irs.gov/uac/about-publication-535

2 Replies
Level 12

I am starting a business in December but will not be operational until January. Would I be able to deduct business expenses from my current year taxes?

You start deducting expenses (including Start Up Expenses) when the business is 'open'.  If it is "not operational" until January, that is when you would first start to use deductions.

In the event the business is a Corporation, you still need to file a tax return, even if the business is not yet 'open' and don't have any income or deductible expenses.
Level 20

I am starting a business in December but will not be operational until January. Would I be able to deduct business expenses from my current year taxes?

Generally, you can only deduct business expenses from business income.  You deal with your startup costs in the first year your business is "open" and has income.

Startup costs up to $5,000 can be deducted (with certain limits).  Startup costs over $5000 must be amortized over 15 years; startup costs under $5000 can also be amortized if you want to.  See here for more  https://www.irs.gov/uac/about-publication-535