Can I possibly deduct the cost of ingredients for menu development under start-up costs? Which category should I put this expense under?
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.