Solo LLC Startup Costs Across 2025–2026 — When to Deduct?

[HealingPracticeLLC]

Hi, I’m looking for guidance on how to handle startup and education expenses for a new single-member LLC. I formed my LLC in September 2025 while working full-time as a W-2 employee and began this business as a side venture. I started incurring startup costs in 2025 (LLC and DBA formation, business insurance), with additional setup costs continuing into 2026 (website development, logo design, etc.).

I signed a lease in March 2026, and my website launched at the end of that month. That’s when I began offering services to clients.

I operate as a Reiki practitioner, with a small amount of product sales and minimal inventory. I've also paid for continuing education and advanced training related to this business in 2025 and January 2026. I had previously completed Reiki II and pursued this additional training to advance to the Master level and expand my services.

My questions:

1. Should I deduct startup and related expenses on my 2025 return, or in 2026 when the business became active?
2. How are startup costs treated when they span two tax years before the business begins operating?
3. Would my training expenses likely be considered maintaining/improving existing skills, or qualifying for a new trade or business?

Thank you for any guidance!

[MaryK4]

You will want to wait until 2026 to start deducting your business expenses.  Startup costs are not deductible in the year they are paid if the business has not yet launched. Instead, you "capitalize" them and claim them in the first year your business is active—in your case, March 2026.  

You will be able to deduct up to $5,000 of any of the Startup expenses in 2026, any additional amount will have to be amortized (deducted over the next 15 years).

If you were already practicing as a Reiki practitioner and this training improved your existing skills for that business, it is generally deductible. If the Master Level training is considered a requirement to enter a new profession or a different type of practice you weren't previously qualified for, it is not deductible.

I wish you continued success in your venture!

[HealingPracticeLLC]

Thank you for the detailed reply!

I was offering complimentary Reiki sessions to friends, family, and at a local animal shelter to refresh and maintain my skills before pursuing advanced training and formally opening my business.