GCEA
Employee Tax Expert

Get your taxes done using TurboTax

Hi @antd1125 ,

 

It is not uncommon for new businesses to have losses in the first few years. You should report your losses/expense incurred in your Schedule C .  You can deduct the following startup cost:

  • Expenses related to creating the business
  • Expenses related to launching the business
  • Business organization costs

You can only write off these expenses if you actually opened up the business. Start up cost are limited to $5,000 deduction the 1st year and if it exceeds that amount you would have to amortize the remaining balance. 

The loss is apply against any ordinary income you earned  (Examples of ordinary income : W2 income, 1099 NEC, Sch C ) therefore reducing your taxable income. 

 

Please make sure you to review the guidelines between a business or hobby according to the IRS rules. I included the link below.

 

Here are some helpful links:

Startup Business Tax Tips 

Calculate your startup costs 

Business or Hobby? Answer Has Implications for Deductions  

Taking Business Tax Deductions 

 

Thank you and good luck!