topic If I started a business but do not have a license for that business yet Am I still able to deduct those expenses on the 2021 tax form? We have put tens of thousands in? in Business & farm

If I started a business but do not have a license for that business yet Am I still able to deduct those expenses on the 2021 tax form? We have put tens of thousands in?

wixinator — Fri, 31 Dec 2021 16:17:50 GMT

Do I need a business license in 2021? Or will it be ok to not have one yet still deduct all expenses on 2021 tax form?

Re: If I started a business but do not have a license for that business yet Am I still able to deduct those expenses on the 2021 tax form? We have put tens of thousands in?

Mike9241 — Fri, 31 Dec 2021 16:51:00 GMT

we have no clue as to what business you're in, where you're located, or even if you need a business license. licensing requirements vary by locality, city, and state. they can also vary by the legal form of the business.

as to whether the expenses are deductible, there are two classes of expenses. one is start-up expenses. they are expenses incurred before the business starts and are subject to the rules of code sec 195. after the business starts the expenses incurred would be deductible. you need an education and have many questions best answered by a tax pro in your area.

Re: If I started a business but do not have a license for that business yet Am I still able to deduct those expenses on the 2021 tax form? We have put tens of thousands in?

xmasbaby0 — Fri, 31 Dec 2021 16:51:09 GMT

The IRS does not ask you to enter a business license on a tax return. If you are self-employed then you will report your self-employment income and pay self-employment tax for Social Security and Medicare, as well as ordinary income tax. If you have obtained an EIN you can use that for your Schedule C---which is the form you need to report your business expenses, etc.

https://ttlc.intuit.com/questions/2903027-how-do-i-report-income-from-self-employment

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

Re: If I started a business but do not have a license for that business yet Am I still able to deduct those expenses on the 2021 tax form? We have put tens of thousands in?

TomD8 — Fri, 31 Dec 2021 21:03:44 GMT

You'll find the IRS rules in the Going Into Business section of this IRS reference:

https://www.irs.gov/publications/p535#en_US_2020_publink1000208611