However, standard accounting and taxation law are both strict on the distinction: Expenses are deductible against income, so they reduce taxable income.
In this case, the startup costs and startup funding match the fiscal year—and they happen in the time before the launch and beginning of the first operational fiscal year.
Assets look better on the books than expenses, but there is rarely any clear and obvious correlation between money spent on research and development, and market value of intellectual property. The plan should include funding to cover permits, zoning and refitting the place of business to satisfy licensing requirements.
And then solve the resulting cash flow problem by adding financing including loans and investments. Startup expenses are those expenses incurred before the business is running. For example, here is how the Soup There It Is balance sheet looked before the founders added investment, loans, and inventory: Do you see the problem there?
The same defining point affects assets as well. That kind of cash in the bank would be nice, but usually completely unattainable. Advertising should be considered a monthly expense that can include the cost of Internet advertising, postage for mailings, sales brochures, stationary, printing costs, newspaper advertising and other promotional events.
Startup assets: Typical startup assets are cash the money in the bank when the company startsbusiness or plant equipment, office furniture, vehicles, and starting inventory for stores or manufacturers.
There are many different ways to estimate cash flow during the early months of a new business.