Can I Deduct Business Startup Costs?

Starting a business involves real costs before you ever make your first dollar, and the IRS provides a way to deduct some of those expenses. You can deduct up to $5,000 of startup costs and up to $5,000 of organizational costs in your first year of business. If your total startup costs exceed $50,000, the first-year deduction begins to phase out. Any remaining costs that you cannot deduct upfront are amortized over 15 years. Startup costs include market research, advertising to launch your business, employee training before opening, and professional fees paid to set up the business.