Expenses prior to launch

Deveaujac — Tue, 10 Mar 2026 06:59:27 GMT

I am working towards opening my own business, and have received a TIN for my LLC.

I am currently in the build-out phase and expect to open for business (i.e. generating revenue) in Spring of 2023. Expenses incurred to-date are all related to preparing the business for opening: supplies, furniture & fixtures, legal fees, design fees, tax filing costs, etc.

How are the expenses I've incurred in 2022 treated for deductibility on my 2022 (or future?) tax return?

Thank you

Re: Expenses prior to launch

Anonymous — Wed, 16 Nov 2022 19:56:07 GMT

@Deveaujac thank you for participating in our event.

From what you have said, I gather that you are the only owner of the LLC. In that situation, you will file a schedule C for your business once it is ready for business as a sole proprietor. As a sole proprietor, in the first year you are in business (2023 for you),

- You can deduct up to $5,000 in startup and $5,000 organizational costs as current expenses if the costs are under $50,000, respectively.

- You can choose to amortize startup and organizational costs greater than $5,000, respectively, (but less than $50,000, respectively) over a period of 15 years.

- If your startup or your organizational costs are more than $50,000, respectively, the excess amount reduces the amount you can deduct.

A start-up cost is recoverable if it meets both of the following requirements:

It's a cost a business could deduct if they paid or incurred it to operate an existing active trade or business, in the same field as the one the business entered into.
It's a cost a business pays or incurs before the day their active trade or business begins.

Start-up costs include amounts paid for the following:

An analysis or survey of potential markets, products, labor supply, transportation facilities, etc.
Advertisements for the opening of the business.
Salaries and wages for employees who are being trained and their instructors.
Travel and other necessary costs for securing prospective distributors, suppliers, or customers.
Salaries and fees for executives and consultants, or for similar professional services.

Supplies, fixtures, design fees are part of start up costs.

Legal fees incurred to set up the LLC would qualify for organizational costs.

Some of the furniture may be considered an asset and amortized over its life time.

Here is a helpful article with more information

Here’s how businesses can deduct startup costs from their federal taxes

topic Expenses prior to launch in Get your taxes done using TurboTax

Expenses prior to launch

Re: Expenses prior to launch