| Start up expenses are expenses that are incurred prior to starting a business. These are expenses that are incurred in connection with costs of researching a new venture, consulting costs paid to an professional for evaluating a prospective business venture, travelling to the prospective business site, marketing expenses to promote the new business openings, in short these costs are incurred prior to physically starting a new business.
Organization expenses are expenses incurred usually involve accounting and legal expenses incurred to establish a new corporation or partnership. They include State filing fees to establish a new entity, the initial costs of holding a shareholder's meeting to elect a new board of directors, obtaining the corporate kit and share certificates etc.
As far as your business is concerned both of these costs are usually capitalized and amortized over 60 months. However, recently IRS revisited this subject and have now permitted taxpayers to write off the first $5,000 of organization and startup expenses in the first year of the new business, with the excess balance of expenses to be amortized over 60 months.
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