Most business expenses have to be “expensed” on the company’s financial statements as incurred. However, the IRS requires companies to amortize certain one-time costs associated with starting a new business, opening a new facility or starting a new operation over a 15-year period.

Startup costs include most investigative or due diligence costs associated with researching a business plan. Startup costs can also include rent, payroll, travel, professional fees and other costs that are incurred by a new company before active customer solicitation and revenue generation.

During the first year, a company can deduct $5,000 of startup costs. However, this amount is reduced by the amount which startup costs exceed $50,000. Talk to a qualified accountant to learn more about record-keeping for business tax reporting purposes.