LLC formation legal fees belongs on Line 27a, other expenses.
Why line 27a
Legal and filing work to form the entity happens before the business is open, which makes it a start-up or organizational cost rather than an ordinary line 17 expense. You elect to deduct a capped amount in the first year the business is active and amortize the rest over 180 months, and whatever you take is reported in other expenses on line 27a. The filing fee paid to the state follows the same treatment as part of the organizational cost.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so LLC formation legal fees lands on Line 27a without you sorting it.
Start for freeWhat LLC formation legal fees is confused with
- Line 17, legal and professional services
- Legal work on running a business that is already open is line 17; legal work that brings the business into existence is a start-up or organizational cost.
- Form 4562, form 4562, carried to schedule c line 13
- The part you do not elect to deduct in the first year is amortized, computed in Part VI of Form 4562, and then carried into other expenses.
- Line 23, taxes and licenses
- Annual report and franchise fees paid once the business is running are taxes and licenses on line 23, unlike the original formation filing.
Examples that belong on line 27a
- A $900 lawyer fee to draft the operating agreement before you opened
- The $200 state filing fee for the articles of organization
- $350 of legal advice on whether to form an LLC or stay a sole proprietor
- A $150 formation and EIN package bought a month before the first sale
What does not belong here
- A full line 17 deduction in the year paid
- Costs of acquiring a specific asset, which go into that asset's basis
- Costs incurred after the business was already open, which are ordinary expenses
The limit that applies
For tax year 2026 you can elect to deduct up to $5,000 of start-up costs and $5,000 of organizational costs in the first year, each reduced dollar for dollar once that category exceeds $50,000, with the remainder amortized over 180 months.
What to keep
Keep the formation invoices with their dates and a note of the date the business actually began. That date is what makes a cost a start-up cost rather than an ordinary one.
Other expenses on line 27a
| Expense | Line |
|---|---|
| a background check | Schedule C, Line 27a |
| a branded gift for a client | Schedule C, Line 27a |
| a business coach | Schedule C, Line 27a |
| a conference registration fee | Schedule C, Line 27a |
| a hot-desk day pass | Schedule C, Line 27a |
| a payroll service | Schedule C, Line 27a |
| a professional certification renewal | Schedule C, Line 27a |
| a stock photo license | Schedule C, Line 27a |
| a telephone answering service | Schedule C, Line 27a |
| a trade show booth fee | Schedule C, Line 27a |
| a translation service | Schedule C, Line 27a |
| an online course | Schedule C, Line 27a |
Related lookups
- Where do tax preparation fees go on Sch C?
- Where does a website build go on Schedule C?
- Where does a business license go on Schedule C?
Sources
- Instructions for Schedule C (Form 1040)
- Publication 334, Tax Guide for Small Business
- About Form 4562, Depreciation and Amortization
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so LLC formation legal fees lands on Line 27a without you sorting it.
Start for free