Amortizing Startup Costs
Written by Aparna Devalla, CPA
Curated by Rubric Financial
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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.
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