SMLLC One time business license fee

[dmblue_tax]

Hello,

I started a SMLLC in 2023 and paid one time business license fee to a firm for business software, related training, and business marketing, consultations, software help to get the business going in first year. My 1-year contract has expired and I do not need to pay any other fees to this firm anymore.

How do I claim this on Schedule C?  Is this Section 179 depreciation or considered Section 197 Intangible and needs to be amortized over 15 years?

Thank you

[MinhT1]

This can be categorized as Startup costs.

Startup costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Organizational costs include the costs of creating a corporation or partnership.

You can elect to deduct up to $5,000 of startup costs in the year in which the active trade or business begins. This can be claimed on Schedule C. Any remaining costs must be capitalized and amortized.

You can also elect not to deduct those startup costs and amortize them.  Startup costs are amortized over a period of 180 months (15 years).

Please read this IRS document for more information, under the heading Business Startup Costs.

[dmblue_tax]

Thank you for getting back to me.

So, if the cost of business package is over 5K, I can elect to claim startup cost of 5K on schedule C and amortize rest of the amount on form 4562?

[PatriciaV]

Yes, you are correct. Expense $5,000 this year and amortize the balance over 15 years.

@dmblue_tax