Start up costs for a business - Self employed or sole trader tax implications

Start up costs are the costs of starting up or purchasing a business. Taxpayers can deduct up to $5000 of the start up costs. This $5000 allowance however can be reduced (but not less than zero) if the total start up costs exceed $50,000. The remaining start-up costs that are not reduced in the year in which the trade or business begins must then be amortized and capitalized over a period of 180 months (15 years) on a straight line basis. (this is the same treatment as the Section 197 incurrs). Some examples of Start up costs include

1. Analysis or Business Plan.

2. Attorney legal fees in connection with setting up the business

3. Website design costs. 

4. Surveys of the Market

3. Consulting fees and professional fees that are connected with starting the business.