Barbara Lemieux, 2016

Financial Education Center

Cash Flow Issues and Record-Keeping

Budgeting for Your First-Year Costs

If you're just starting a business, remember that you can't make a go of it without spending some money up front. You'll need to budget dollars for many items, including the following:

  • hardware/furnishings/other equipment
  • office space
  • communications lines and devices
  • sales taxes on your equipment
  • physical damage insurance on your equipment and other insurance
  • maintenance and repairs, including replacing such items as brakes and tires
  • licenses and permits
  • administrative items: income and expense ledger, calculator, a personal computer, etc.
  • envelopes, letterhead ,stationery, invoices, and business cards
  • professional fees for legal, tax, and accounting advice
  • marketing, including logo design and website

Other First-Year Considerations

Start-Up Costs

Organization and start-up expenses are the costs of going into business. Organization costs include attorney's and accountant's fees, incorporation costs, etc. Start-up costs include what you pay for investigating a prospective business and getting the business started. These include surveying potential markets, advertising for the opening of the business, salaries and wages for employees who are being trained, and travel and other necessary costs for obtaining prospective customers.

Most costs of starting a new business must be capitalized if paid or incurred before the date on which you begin business. In order to deduct these types of costs, an election must be made on your tax return to amortize the costs over a period not to exceed 180 months. Consult your tax professional for more information.

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