Small Business :
If I’m starting a small business that has yet to produce any revenue, what form do I file to deduct from my current taxes owed from my salaried position? Specifically, I am currently an employee with a fixed salary who has made software and office supply purchases in order to get a web-based small business up and running. I have yet to launch, but would like to deduct my costs of starting the business from my current taxes owed.
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You would file a schedule C for your business but I don’t think it works like you want it to. You can’t deduct more than you made unless you file it as a loss but its really not a loss. You better ask a tax professional or call the IRS.
In general you must amortize start-up costs incurred before your business starts trading. You use Form 4562 for that.
See IRS Pub 535 for information on handling them, along with Form 4562 and the instuctions for Form 4562
I would highly recommend a consultation with a local CPA or EA who specializes in small business accounting and tax issues.
Here is a whole section of Small Business Tax Questions/Answers and Tips.
Just walk down to the Small Business Section near the bottom of the page: