When you can deduct start-up costs depends on when on the business start date is and on what can actually be deducted. Generally, you can go back a year to figure the start-up cost from when you start the business.
But regardless, you will want to use the Self-Employed version if it is a sole-proprietor business.
With self-employed you will be able to track all of your income and expenses on a Schedule C, and this will track your self-employment taxes.
As for startup costs not everything is deductible.
According the IRS, startup costs are "amount paid or incurred for ;
- Creating an active trade or business, or
- Investigating the creation or acquisition of an active trade of business."
What is not included in startup cost;
- Costs to qualify to get into that type of business (getting a real estate license, for example).
- Costs of buying business assets (like a building, equipment, or vehicles). These costs are considered separately for tax purposes.
Purchase of tools and equipment would be depreciable assets.
Click here
for an article for startup deductions.
Click here
for a link to 3 Deductions for Startup and included link to IRS Pub 535.
