Can I deduct start up costs incurred for a business?

Answer: Start up costs relate to future years, making them a capital expenditure. Capital expenditures can not be expensed immediately, but rather must be expensed over future years. An exemption does exist and some start up costs can usually be expensed right away.

Example: A taxpayer spends $10,000 to set up a small business. $5,000 may be expensed immediately and the other $5,000 needs to be amortized over the next 15 years.