Status
Publication 535 has not been updated for tax years after 2022. The IRS folded its content into Pub 334, the form instructions, and topic-specific publications. The old Pub 535 remains useful as historical reference for the structure of the ordinary-and-necessary test, the start-up expense rules, and the long lists of deductible and non-deductible expense categories.
Ordinary and necessary
Section 162 allows a deduction for ordinary and necessary expenses paid or incurred in carrying on a trade or business. "Ordinary" means common and accepted in your industry. "Necessary" means helpful and appropriate. Together they exclude personal expenses, capital expenditures (which must be depreciated), and expenses related to tax-exempt income.
Start-up expenses (Section 195)
Up to $5,000 of start-up expenses can be deducted in the year the business begins (phased out dollar-for-dollar above $50,000 in start-up costs). The remainder is amortized over 180 months (15 years). Common start-up expenses include market research, professional fees to investigate a business, advertising before opening, and travel to find suppliers or sites.
Organizational costs (Section 248/709)
Costs to legally form a corporation or partnership — incorporation fees, drafting articles of organization, filing fees, attorney fees for entity formation — are eligible for the same $5,000 immediate deduction and 180-month amortization treatment.
Insurance
Business insurance premiums are deductible: liability, property, professional malpractice, business interruption, key person life insurance (under specific conditions). Health insurance for an owner is handled separately on Schedule 1 (the self-employed health insurance deduction), not on Schedule C.
Companion forms and schedules
Most IRS publications are written to support one or more specific forms. The publication's first chapter typically lists the forms it covers, and the form instructions cross-reference the publication. Used together, the form instructions and the publication answer most line-by-line questions. When they conflict — which is rare but happens, usually after a mid-year legislative change — the form instructions generally win, because they are revised more frequently and reflect the most current IRS interpretation.
Annual updates worth tracking
Each year's edition of the publication updates inflation-adjusted dollar limits, references to the current-year forms, and any legislative changes from the prior year's tax bills. The "What's New" page at the front of each publication is the single highest-value page for an experienced reader; it flags exactly which paragraphs in the prior edition no longer apply. If you maintain a personal tax-planning workbook, building a discipline of re-reading just the "What's New" page each January catches almost every legislative change that affects a small-business return.