If you have income for the same tax year that you have startup costs, you deduct the costs against your income like any other business cost (supplies, labor etc.) -- or for equipment costs you depreciate them according to the usual rules.
If you have startup costs in a tax year before you start operating the business, then the following rule applies:
1. If your startup costs are less than $5000, you can deduct them as an operating expense in the first year that you report business income.
2. If your startup costs are more than $5000 but less than $50,000, you can deduct $5,000 as an operating expense and amortize the rest over 15 years.
3. If your startup costs are more than $50,000 you must perform a calculation to determine how much you can expense and how much you must amortize.
