No, the business does not yet have to exist. The key date is when you open for business. If a rental business, the first day you offer the property for rent. If you are offering services or merchandise, the first day you accept orders, etc. All expenses directly related to getting the business up and running before that date are start up expenses. Be careful though. You can only claim expenses that actually went towards the business (e.g., thinking you might sell Amway you travel to an Amway convention, but end up opening a eBay reseller business instead. The Amway travel would not be deductible as a startup expense). I'm not an accountant, so you will need to check before you file taxes, but as I recall only the first $5000 in expenses can be deducted in the first year. Any more than that must be treated as a capital expense and deducted in equal amounts over the next 15 years.