Start-Up Expense Vs Start-Up Assets
Startup expenses are the costs that company spends prior to opening the business. Before starting any business, the founder needs to have some expenses such as market research, registration fee and so on. They are part of business expenses even they happen before the company’s establishment.
Startup expenses also happen during the process of creating the entity. There is various type of business that requires difference process of registration. Some businesses require several licenses from the governments, these expenses will be included in the business expenses and record into the financial statement.
Example of Startup expenses
These are the example of startup expenses:
- Business Plan: The founder needs to prepare a business plan as it is the road map for them. We need to have a business plan even before the process of registration. In order to prepare such a plan, we need to hire expert and paid the consulting fees.
- Market Research: Before deciding to create any new product or service, company needs to do market research to understand the competitor and customer behavior. This process may incur before the company establishment.
- Salary Expense: If the company does not outsource the service from other suppliers, they need to hire someone to do the initial work.
- Consultant Expense: Most of the company use consultant service to support the process of registration, tax, and others.
- Registration fee: It is the fee which requires during the registration process.
Startup Assets are the cash, equipment, and other resources that the company owns before or during the startup process. The assets include cash, equipment, building, raw material, trademark or the copyright.
The startup assets will be vary depending on the type of business. Some business require a huge startup assets during the process of registration. On the other hand, the services business dose not require any significant assets to operate.
The business owner need to estimate the capital which is necessary to fund for these important assets. We need them even before the company is established.