To enter in your start-up cost deduction within the program, please follow the path below:
- Federal Section
- Income
- Profit or Loss from Business
- Schedule C (Edit)
- Other Expenses
The IRS allows you to deduct up to $5,000 worth of startup costs. The costs of franchise start-up costs and monthly fees is included in this amount. If you have any start-up costs exceeding $5,000 you will need to amortize these expenses over a 15 year period. Amortizing these excess expenses will allow you to take an evenly allocated expense every year for the next 15 years. According to the IRS, "Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business."
Where do I enter amortize excess start-up costs?
If you need to amortize your expenses you can do so by taking the following path within the program:
- Federal Section
- Income
- Profit or Loss from Business
- Schedule C (Edit)
- Depreciation
- Assets
Here you will enter your start-up cost information. Your depreciation method will be 'Amortization' and your depreciation period or Useful Life will be 15 years. In the drop-down menu below "Select Code Section Used" you should select "SEC 195 - Business Start-up Costs".
You may read more about start-up costs within IRS Publication 535