@andreeank
As soon as you agree to work together and split the profits, you have a partnership. It doesn’t require any formal paperwork just a meeting of the minds, an agreement. Formal paperwork is always recommended, in case in the future you disagree about what the agreement was. I would put your partnership agreement in writing in some form sooner or later. But as soon as you agree to work together and share the profits, you have a partnership.
Startup expenses are things that you do to prepare to engage in business but occur before you are actively engaged in ongoing business opportunities. Once you are engaged in ongoing business activities, you have regular running expenses, even if you haven’t been paid yet. For example, if you bought all the software and hardware before you began advertising your services, they would be start up expenses. But if you advertised your services and got a couple of clients while you were actively engaged in seeking business opportunities, and then started buying equipment to fit the needs of those clients, those would be business expenses, not start up expenses.
Equipment and other assets that have an expected lifetime of more than one year are handled as assets, not start up expenses. Assets must be depreciated over their useful life. In some cases, assets may be expensed during the first year or depreciated in one year rather than over several years, through the operation of the small business safe harbor election or section 179. Computers are assets, and sometimes software is an asset rather than an expense. Vehicles, tools, and other equipment would also be considered an asset. Assets are always handled via depreciation, not as start up expenses. That means you will always get a tax benefit from placing assets in your business, although it may be spread out over several years.
The kinds of start up expenses where you may be limited are other expenses that are not assets, this might be the cost of acquiring licenses, or rent on a storefront before you open, or advertising, or legal advice, or buying consumable supplies that are not considered assets. If your start up expenses (not counting your asset purchases) are less than $5000, you can deduct them all in the first year that you begin your business. If they are more than $5000, you can deduct some of them in the first year of the business and the rest must be spread out over 15 years. You never lose the ability to deduct a start up expense, the rules only change when you deduct them.
After your business is running, that is to say, when you are engaged in ongoing business activities for seeking profit, then you have operating expenses. Operating expenses are always deducted against current operating income. There is no $5000 or any other limitation on deducting your operating expenses. You can even deduct operating expenses if you haven’t been paid yet. For example, if you engage a contract where you are actively doing work and incurring expenses in 2022, but you won’t be paid until 2023, those expenses are still deductible on the 2022 tax return. If your expenses are more than your income, that creates an operating loss, and that loss is carried forward and will offset your income in a future year.
Now, I have not gone into detail about how to determine whether your software is an asset or an expense, or when do use section 179, or how to amortize start up expenses over $5000. This is partly because I don’t have the information on the top of my head and I don’t want to look it up, and partly because you really do need to seek help from a qualified professional. It sounds like none of the people you have talked to so far would meet that definition. I find it hard to imagine a qualified accountant would tell you to file on schedule C, or tell you that you can’t deduct more than $5000 of expenses, or fail to tell you that your computers are assets to be depreciated and not expenses.
It sounds like you need to interview several other CPAs to find the right one. You may also want to buy a small business tax guide, there are several good ones in the bookstore. (However, I would prefer to hire a qualified accountant then to have to educate myself on business taxes in addition to actually running the business.)
If you started your business activities and formed your partnership in 2022, then you are not late filing. One of the experts may have assumed that you started your business in 2021 and are preparing a late 2021 tax return.
