Is startup costs line 27a or line 13?

Equipment and vehicles bought before opening are not start-up costs: they are assets placed in service when the business begins and are recovered on line 13 through Form 4562.

Is startup costs line 27a or not deductible?

If the business never opens, the investigation and setup costs are not start-up costs at all, since the election depends on the trade actually beginning.

Where do startup costs go on Schedule C? Line 27a

Q: Where do startup costs go on Schedule C?

Startup costs belongs on Line 27a, other expenses. Costs you paid before the business was open are not deductible in the year you paid them. They wait for the year the business actually began, and then an election under section 195 lets you deduct up to $5,000 of them at once, with that $5,000 reduced dollar for dollar once total start-up costs pass $50,000. The remainder is amortised over 180 months starting with the month the business began, so a mid-year start gives you only part of the first year's amortisation. Both pieces, the first-year amount and the yearly amortisation, are described in Part V and carried to line 27a, with the amortisation computed in Part VI of Form 4562.

Short answer Schedule C, Line 27a Other expenses (itemised in Part V)

Startup costs belongs on Line 27a, other expenses.

Why line 27a

Costs you paid before the business was open are not deductible in the year you paid them. They wait for the year the business actually began, and then an election under section 195 lets you deduct up to $5,000 of them at once, with that $5,000 reduced dollar for dollar once total start-up costs pass $50,000. The remainder is amortised over 180 months starting with the month the business began, so a mid-year start gives you only part of the first year's amortisation. Both pieces, the first-year amount and the yearly amortisation, are described in Part V and carried to line 27a, with the amortisation computed in Part VI of Form 4562.

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 startup costs lands on Line 27a without you sorting it.

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What startup costs is confused with

Line 13, depreciation and section 179 expense deduction: Equipment and vehicles bought before opening are not start-up costs: they are assets placed in service when the business begins and are recovered on line 13 through Form 4562.
not deductible, not deductible: If the business never opens, the investigation and setup costs are not start-up costs at all, since the election depends on the trade actually beginning.
Form 4562, form 4562, carried to schedule c line 13: The amortisation schedule lives in Part VI of Form 4562 even though the deduction lands in Part V on line 27a, so the form is filed in the first year of the election.

Examples that belong on line 27a

$3,400 of market research, a logo and legal setup before opening: all $3,400 deductible in the first year
$12,000 of pre-opening costs: $5,000 now and $7,000 over 180 months
A business that opened in October: three months of amortisation in the first year
$54,000 of start-up costs: the $5,000 immediate amount is reduced to $1,000 by the $50,000 threshold
$6,000 of pre-opening rent on the premises: a start-up cost, not line 20b in the year paid

What does not belong here

Deducting pre-opening costs in the year paid, before the business began.
Equipment bought before opening, which is depreciated rather than amortised.
Interest and taxes incurred before opening, which follow their own rules rather than section 195.
Costs of forming an entity, which are organisational costs under a different provision and do not arise for a sole proprietor.

The limit that applies

The first-year amount is $5,000, reduced dollar for dollar by total start-up costs over $50,000, with the remainder amortised over 180 months beginning in the month the business starts. Both figures are statutory and are not indexed.

What to keep

Keep every pre-opening receipt with its date and a record of the date the business actually began, because the start date drives both the election year and the amortisation start month. A one-page schedule of the amortisation makes future years mechanical.

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

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Sources

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.

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