Amortizing Startup Costs

What Qualifies as Startup and Organizational Costs

• Startup costs under IRS Section 195 include expenses incurred before the business begins active operations, such as market research, advertising, training, and travel to potential suppliers or customers.
• Organizational costs include legal fees for incorporation, state filing fees, and costs of organizational meetings and temporary directors.
• Costs must be the type that would be deductible as ordinary business expenses if incurred by an existing business — capital expenditures do not qualify.
• The date your business begins active operations is critical; all qualifying expenses incurred before that date are subject to Section 195 treatment.