Startup Costs: What You Can Deduct in Your First Year
January 19, 20251 min read
By the I&S Accounting teamReviewed by a licensed U.S. CPA
Starting a new business? The IRS allows you to deduct up to $5,000 in startup expenses in your first year, such as:
- Business formation fees
- Legal and accounting services
- Marketing and research costs
Did you know? Expenses exceeding $5,000 can still be deducted — but they need to be amortized over several years.
Keep accurate records of all your initial expenses so you can maximize this deduction. If you're not sure how to categorize a startup cost, that's exactly the kind of thing clean bookkeeping (and a quick question to your accountant) solves before it becomes a missed deduction.
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