Can you claim business expenses before making income?

Yes — in the U.S., you can often incur business expenses before you start making income, but whether and when they’re deductible depends on the facts.

If you are still in the startup phase, costs like market research, pre-launch advertising, travel to line up suppliers, and certain filing or setup expenses are usually treated as startup or organizational costs rather than immediately deductible business expenses. Once the business begins operating, some of those costs may be recovered under the IRS startup-cost rules, but the exact treatment depends on the type of expense.

If the business has actually started operating, you can generally deduct ordinary and necessary business expenses even in a year when you have no sales yet. The key point is that the business must be actively carrying on the trade or business, not just planning to begin.

A real profit motive matters. If the IRS concludes the activity is really a hobby rather than a business, deductions can be limited.

If you spend money planning a business but never actually start operating it, the tax treatment can be different and depends on the specific facts and what happened to the project. It is not safe to assume those costs are automatically deductible as normal business losses.

Bottom line: you may be able to claim some expenses before earning income, but the timing and deductibility depend on whether you have started operating and on the type of expense.

This is U.S.-specific, and exact treatment can vary by facts and by country, so it’s worth checking with a CPA or tax professional before filing.