Incorporation expenses are not considered a startup cost. They are an "organizational expense." Examples of organizational costs include:
- cost of temporary directors
- cost of organizational meetings
- state incorporation fees
- cost of legal services
Business startup and organizational costs are
generally capital expenditures. However, you
can elect to deduct up to $5,000 of business
startup and $5,000 of organizational costs paid
or incurred. Any remaining costs must be amortized.
In TurboTax enter the incorporation fees and other organizational expenses (up to $5,000) as a business expense. Any organizational expenses over $5,000 should be entered as an asset and amortized over 15 years.
- Click on the Business tab
> Continue > I'll choose what to work on
- On the Let’s gather your
business info screen, in the Business Income and Expenses section,
click the Start/Update button. (See Screenshot #1,
below.)
- If you have already started
adding information about your business, you will see the Here's the
business info we have so far screen. Click on the Edit box
next to the business. (Screenshot #2.)
- If you haven't already started
adding business information, continue through the screens to enter the
needed information.
- You will now be on the Your
[business description] Business screen. In the Business
Expenses section, click on the Start/Update box next to Other Common Business Expenses. (Screenshot #3)
- On the Let's write off some business expenses screen click on the Start/Update box next to the appropriate category. You could put some or all of the cost under Legal and Professional Fees or include some of the expense in Taxes and Licenses or Other Miscellaneous Expenses. The category isn't crucial. (Screenshot #4)
To enter startup costs, in Step #5 above:
In the Business
Expenses section, click on the Start/Update box next to Startup Costs.
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