Started a business with no income yet. Have a separate full time job with W2. Do I enter my small biz expenses?

[gixxergirl23]

I started a business last year but haven't received income from it yet. I have a full time job separate from my business. Do I still enter my business expenses from last year?

[MichaelMc · Accepted solution]

You can claim your business startup expenses, but not on your 2016 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 2016, your startup expenses will become deductible in 2017, when your new business begins to generate revenue. Please see IRS Pub. 535 Business Expenses for more information.

Also, your must distinguish between startup expenses and the amount spent on business assets (machines, booths, 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. When you are ready to file your 2017 tax return, TurboTax Self-Employed (or TurboTax for Business if you have incorporated or created a partnership) will guide you through the steps to enter information about these assets and make the correct choices to expense or depreciate their value.

[gixxergirl23]

Thank you, Michael. This is very helpful! Will the TurboTax Self Employed product also let me enter my normal W2? Or will I need to enter them as two separate tax products? I will still have my full time job throughout 2017 in addition to receiving income from my small business.

[MichaelMc]

I guess I could have been clearer. Yes, that's the beauty of TurboTax Self-Employed -- it completes your Schedule C for your self-employed business then moves right into the rest of your tax return, where you can enter W-2s, 1099s, and anything else that you would normally report on your return.
You would only need a separate product if your business gets to the point when you incorporate or form a partnership. Those returns are handled by TurboTax Business, which does not do personal returns.

[nathanielmarcusn]

Michael, Thanks for the information. I had the exact same questions.

[108june1971]

That's was much clearer.

[kevinacker2]

Wanted to say thank you for this information as it helped me as well!