independent contractors and start up costs

I'm thinking that what you are paying her both for her labor and for her own costs incurred.  If this is true, her labor is an expense. Anything she does setting up your company is a start-up or organizational cost.

Organizational Cost.

The cost must qualify as one of the following.

• A business start-up cost.

• An organizational cost for a corporation.

• An organizational cost for a partnership.

For costs paid or incurred after October 22, 2004, and before September 9, 2008, you can elect to deduct a limited amount of business start-up and organizational costs in the year your active trade or business begins. Any costs not deducted can be amortized ratably over a 180-month period, beginning with the month you begin business. If the election is made, you must attach any statement required by Regulations sections 1.195-1(b), 1.248-1(c), and 1.709-1(c), as in effect before September 9, 2008.

Start up costs are those expenses incurred in planning and setting up the business, costs you incur before you open the door.

Here is how it works:

Expenses paid or incurred after October 22, 2004: 

 - You can deduct up to $5,000 in startup and $5,000 organizational costs as current expenses if the costs are under $50,000, respectively.

 - You can choose to amortize startup and organizational costs greater than $5,000, respectively, (but less than $50,000, respectively) over a period of 15 years.

 - If your startup or your organizational costs are more than $50,000, respectively, the excess amount reduces the amount you can deduct.