sole proprietary business start up using Schedule C

[tax2021m]

I started a sole proprietary side business in 2021 trying to make some electronic gadget starting with prototyping activities. But I have not registered any business entities, such as an LLC yet. I have not sold anything related to relevant business activities, however I have incurred some notable cost, such as acquiring instruments, tools, and parts to build prototypes. I wonder if I am allowed to use Schedule C to deduct start up expenses?

If I have another business activity, e.g. crypto mining that is not related with the above business activity, do I have to file another Schedule C, or I shall lump up the two into one form?

Many thanks!

[DanP0428]

You file a separate schedule C for each business. 

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 2021, your startup expenses will become deductible in 2022, or in whichever year your new business begins to generate revenue.

[tax2021m]

Can you claim start up expenses more than one year ago? Which form to use?

The Schedule C only asks if you have startup expenses in the tax year (in this case 2021). For tax year 2022, say I no longer have new startup expenses, I would expect not to check that box. How should I deduct the start up expenses incurred more than one year ago?   Thanks.

[DawnC]

No.  Start-Up costs can only occur BEFORE you ''open the doors''.   Once you start doing business, you can claim your prior start-up costs in that year your business started.   After opening, those expenses are normal operating expenses.   

In the year your business opens, you can deduct all start-up costs from previous years, that year.   Some startup expenses, such as organizational costs, can be either amortized or you can deduct the full cost in the year you open.

Some equipment you must purchase is treated as a regular business expense.   For example, if you’re opening a landscaping business and you buy a truck, generally you must capitalize and depreciate the cost. Such expenses are treated just the same as they would be if you had been operating your business for decades.

Startup Business Tax Tips