Separately from the IRA withdrawal, you have the business start up to think about. You may be able to deduct start up expenses against business income. That may reduce the tax impact of withdrawing the money from the IRA to start the business. But starting a business does not by itself change your IRA taxes. The IRA withdrawal is taxable, under its own rules, and then your business expenses may be deductible under their own rules.
Generally speaking, start up expenses less than $5000 may be deducted in the first year that you have business income. Start up expenses more than $5000 are dealt with by a combination of deductible expense and amortization over 15 years. If you bought an existing business, you may have an investment, in which case you either pay tax on the capital gains later or you have a deductible loss, depending on how the business does. I am much more interested that you get competent tax advice on preparing your business taxes and dealing with your purchase or start up costs correctly.
