Startup Tax Deductions: 7 Things Every Founder Should Write Off

Описание: Reduce your startup tax bill with these 7 IRS-approved deductions. Learn what founders can write off, from software and freelancers to R&D and startup costs.

Startup Tax Deductions: 7 Things Every Founder Should Write Off

 

If you're running a Delaware C-Corp, every dollar counts, especially in the early stages. The good news? You can legally reduce your startup's tax bill by claiming IRS-approved deductions. This guide outlines 7 tax deductions every founder should consider, whether you're pre-revenue or post-product.

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🧾 What Are Startup Tax Deductions?

Startup tax deductions are business-related expenses that can be subtracted from your revenue to reduce your taxable income. They apply whether your startup is:

• Bootstrapped or funded

• Pre-revenue or cash-flowing

• Based in the U.S. or foreign-owned

🧠 These deductions go on Form 1120, your annual corporate return due April 15.

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✅ 7 Tax Deductions Every Startup Founder Should Know

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1. 💼 Startup Costs (up to $5,000)

Before your company officially launched, you likely spent money on:

• Incorporation fees

• Legal consultations

• Market research

• Branding or product planning

You can deduct up to $5,000 in organizational/startup costs in your first year.

🔗 Read: Do Startups Pay Taxes in Year 1?

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2. 👩‍💻 Software & Subscriptions

Tools you use to build and run your business are deductible:

• AWS, Stripe, Notion, Slack, Figma, Brevo

• AI tools like OpenAI, Midjourney, Jasper

• Domain registration & hosting

💡 Tip: Keep receipts and categorize these in your bookkeeping software.

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3. 👷 Contractors & Freelancers

Did you pay a designer, developer, or VA more than $600?
You must send them a 1099-NEC and can fully deduct their payment as a business expense.

🔗 Learn more: 1099s for Startups Guide

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4. 🧪 R&D Expenses (and the R&D Tax Credit)

If you're building software, testing prototypes, or engineering anything innovative, you may qualify for the R&D credit:

• Payroll tax offset

• Direct deduction of development costs

• Available even without profitability

🔗 Full guide: R&D Tax Credit for Startups

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5. 🏠 Home Office Expenses (for Remote Teams)

If you're working from home and using a dedicated space, you may be able to deduct:

• A portion of your rent

• Utilities

• Internet

• Office furniture

📌 Use the simplified IRS method or calculate actual expenses by percentage of square footage.

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6. 🚗 Business Travel & Meals

• Travel to investor meetings, accelerators, or conferences is deductible

• So are meals with clients or teammates up to 50% of the cost

🧠 Be sure to document who you met and why (for IRS justification)

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7. 💵 Depreciation of Equipment

If you bought:

• Laptops

• Cameras

• Studio lighting

• Mobile devices
  You can either deduct the full amount (Section 179) or depreciate over time.

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💡 Bonus: Don’t Forget the 83(b)

While not a “deduction,” filing an 83(b) Election early can save you thousands later when your startup grows. It locks in your tax basis on equity received, at near-zero valuation.

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📥 How to Track Deductions

Use:

• QuickBooks, Wave, or Mercury Books

• Upload receipts regularly

• Tag transactions clearly by category

Or better - let TaxHero AI help you:

• Auto-categorize expenses

• Suggest missing deductions

• Export to IRS-ready reports

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🔗 Related Resources

• Form 1120 Guide for C-Corps

• R&D Tax Credit for Startups

• 83(b) Equity Filing for Founders

• Startup Tax Calendar

• Startup Tax Checklist

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✅ TL;DR: Most Valuable Startup Deductions

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👋 Want Help Claiming These Deductions?

TaxHero AI helps early-stage founders:

• Track deductible expenses

• File accurate Form 1120

• Unlock missed credits like R&D

🧠 Try TaxHero AI → https://taxhero.vc/

 

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