The IRS considers a sole proprietorship or single member LLC to be a disregarded entity. In other words, the IRS does not recognize your business as a separately taxable entity. Income earned by the business is "exactly" the same as income earned by you. Therefore, you can't have a "capital investment" in yourself.
You may have what is referred to as "startup costs". Startup costs are claimed in the first year you are "Open for business" and it flat out does not matter in what year those startup costs were incurred either. Basically, startup costs are the money you have to spend before you can open for business. For example, you may need to purchase tools and equipment for your business, pay all sorts of business registration fees to your town, city, county, parish and state, or purchase some type of liability insurance. All of these expenses are things you *HAVE* to pay for before you can put that "open for business" sign up.
So startup costs are claimed in the first year the business is open. For that first year you can only claim a maximum of $5000 of startup costs, or your first year's taxable business income earnings; whichever is *LOWER*. Anything over that gets amortized and deducted over the next 15 years.
