The United States is an entrepreneurial country—it is the American dream to own your own business, and millions already do. It has been estimated that there are now more than 28.4 million small businesses, 80% of which have no employees. Most expenses related to running a business are deductible, but timing issues and limitations may come into play. The tax rules for your business apply whether you operate a full-time or a sideline business. This chapter deals primarily with business deductions for a sole proprietor, independent contractor, or freelancer who files Schedule C (or, for farming, Schedule F). Of course, many rules discussed in this chapter apply to partnerships, limited liability companies, and corporations.
This chapter explains the tax rules for various business-related deductions and other tax breaks. The rules for claiming a home office deduction are in Chapter 11. Retirement plans for self-employed individuals are discussed in Chapter 5.
For more information, see IRS Publication 15, Circular E, Employer's Tax Guide; IRS Publication 225, Farmer's Tax Guide; IRS Publication 334, Tax Guide for Small Business; IRS Publication 535, Business Expenses; IRS Publication 536, Net Operating Losses; IRS Publication 587, Business Use of Your Home; and IRS Publication 946, How to Depreciate Property. Also see J.K. Lasser's Small Business Taxes 2017 by Barbara Weltman.
The term “start-up” has a very specific meaning for tax purposes. ...