Can I write off my LLC formation fees?

Report this deduction on Form 4562, Depreciation and Amortization, Part VI.

For example, if you spent $3,000 to form your LLC and your total start-up costs were $45,000, you could deduct the full $3,000 in the first year. If your total start-up costs were $55,000, you would only be able to deduct $3,000 - ($55,000 - $50,000) = $2,000 in the first year, and the remaining $1,000 would need to be amortized over the next 15 years.

A calculation is required for this deduction.

To calculate your deduction, divide the total cost of forming your LLC by 15. This is the amount you can deduct each year. If your total start-up costs are $50,000 or less, you can deduct up to $5,000 in the first year. If your start-up costs exceed $50,000, reduce the $5,000 deduction by the amount your total start-up costs exceed $50,000.

Keep detailed records of all start-up costs, including receipts and invoices. The IRS may require these documents to verify your deduction. The risk of an audit increases if you have high start-up costs, so be sure to accurately report your expenses and keep good records.

IRS Publication 535, Business Expenses, Chapter 8, Amortization