Sections 195 and 197 are the two most common sections for tax amortization as they relate to business start-up and incorporation costs. Typically a period of 60 months is used to amortize the amounts incurred for these two sections. On Page 2 of Form 4562, amortization is recorded in the very bottom location of the Form. Seek guidance from the IRS.
There are various forms of depreciation used in the small business world. In general, depreciation is not required but it is advisable. A small business owner should understand depreciation and the various forms of how to calculate the deduction.
Non-physical assets are expensed to the income statement or profit and loss statement via a method called amortization. It is most commonly used in the mortgage industry to refer to the monthly payment made to pay interest and the principal (the amortizable portion) on a debt instrument.
