That depends on where you are in the life of the business.
Perhaps you have on ongoing business and had a year with no income. There are reasons for this: you accepted payment last year for a project that was all-consuming during the year; you had to deal with an illness in the family, etc.). In such cases, you may have incurred necessary and ordinary expenses without having any recognized income. Of course you should deduct these expenses in the year they are recognized.
Conversely, perhaps you are starting a business and have incurred expenses before you open the doors for business. In such a case, you can claim your
business expenses, but not on your 2018 tax return. The general rule is that
business startup expenses are deductible in the year when active trade or
business begins. Since you had no income-generating events in 2018, your
startup expenses will become deductible in 2019, when your new business begins
to generate revenue. Please see IRS Pub. 535 Business Expenses for
more information.
Also, you must
distinguish between startup expenses
(licenses, permits, legal fees, pre-opening advertising, etc.) and the amount
spent on business assets (machines,
equipment, vehicles, etc.). These assets are depreciable over their useful
life, although in many cases can be expensed in the first year put in service
under Section 179 of the Internal Revenue Code.
Note:
The Tax Cuts and Jobs Act of 2017 increased the annual dollar limit on Section
179 deductions. For tax years beginning
in 2018, the maximum section 179 expense deduction is $1,000,000. This limit is
reduced by the amount by which the cost of section 179 property placed in
service during the tax year exceeds $2,500,000.
