when to deduct what kinds of 'costs' or 'expenses' for LLC franchise

Forum|Forum|11 months ago
April 14, 2025
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In December of '24 I formed an LLC and put some money towards a franchise fee to start a business. I also paid some money for training, etc. that went towards the franchise fee in '24, but did not technically start "working" at the business until 2025. I also spent money in 2024 on things like annual (mandatory) conference fees and monthly database access fees, despite not being "open for business" yet. I have somewhat of an understanding that (1) franchise fees need to be amortized over 15 years, (2) even if I am "open for business", I cannot start to put costs/expenses/fees/etc. on a Schedule C until the business starts generating revenue.
My questions are:

a) can I deduct some of the money spent in '24 for training, etc. on 2024 taxes as "startup costs", but NOT on a schedule C?

b) where, and when do I document/deduct/etc. the fees/money paid for the annual (mandaory) conference and database access fees? can these be considered "start up fees" or not?

c) since the franchise fee is being spread out over time and not paid in one lump sum, what amount do I put down as being amortized (the amount I have paid in 2024 is less than $50k, but overall the total franchise fee will be over $50k) over the 15 year period...and when do I start that amortization? 2024 when I paid the majority of it, or 2025 when I am "open for business" and generating revenue?

d) I assume that things like letterhead, business cards, etc. that I purchased in 2024 considered "start up" costs, that are to be entered in 2024, (but not on a Schedule C since I am not generating revenue in 2024) but where are they entered/deduced in TT?

e) since I am not using a Schedule C in 2024, where do I put my filing fee for my LLC I created?

TurboTax Home & Biz Windows

DianeW777

The answers are as follows - no expenses allowed until you are officially open for business in 2025.

(a) - No, not until 2025.
(b) - Yes, they can be start-up fees in 2025.
(c) - You will have the full franchise fee as an amortizable asset beginning in 2025. This expense is considered as a Section 197 Intangible.
(d) - See the link below for start-up tips and expenses that will apply
- Start-up Business Tax Tips

@biggxj

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biggxjAuthor

Thanks for the information/answers!

I can still expense items even if they were incurred in 2024, correct?

Does that also apply for the LLC filing fee too (not deducting it until 2025)?

PatriciaV

Employee

Yes, any eligible expenses incurred to set up your business can be included in Startup Costs, reported in the tax year the business begins. This does include the LLC filing fee.

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