Do I have a business?

[johnmillard49]

In 2023, I have just been setting up my business (equipment purchases, professional association fees, URL purchase, setup LLC, etc.) and am not yet "open for sales", have I "started a business" and therefore can write-off those expenses?

[LeticiaF1]

If your business was not operational in 2023 then you will have to wait to claim those expenses until your business is open.  A business is not considered to be operational until it starts providing goods or services to customers, generating revenue, and conducting its core activities.  

Start-up Business expenses can be deducted in the year your business is operational.  They include the costs of training staff, legal fees and establishing vendors and suppliers.  Start-up expenses have to be amortized with a recovery period that starts with the month the business begins to operate active trade or as a business.  See the following IRS page for more information on how to deduct them as well as the following TurboTax help article:

Here’s how businesses can deduct startup costs from their federal taxes

Start-up Business Tax Tips

Equipment cost will need to depreciated.  When assets have a useful life of more than one year, are used to produce business income, and it is an item that will wear out, they are considered depreciable assets.  See the following TurboTax article with more information on depreciation.

What is depreciation?
 

[johnmillard49]

Thanks, that makes sense.