Helping Your Clients with Business Start-Up Costs

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Pennsylvania is a great state for small businesses. Accountants and CPAs who choose to enter into the small business start-up niche will find their work very rewarding and will be able to provide a variety of valuable services to new small companies.

But before the new company can open, your client will have to spend a good deal of money, from ideation to opening day. Helping your clients be realistic about their start-up costs and track them accurately will increase the chance that the new company will prosper.


Every business is different, so it can be difficult to estimate start-up costs beforehand. You can help your client be aware of the many potential costs likely to be incurred and offer a potential range. If your client is still interested, he or she should begin investigating the feasibility of the enterprise. The first step is a thorough investigation.

These investigative costs or research expenses could include:
  • Market research / competitor research
  • Supply chain research – suppliers, distributors, transport, etc.
  • Facility, equipment, labor market research
  • Consulting costs for a marketing research firm and other potential experts
  • Research regarding the acquisition of an existing company
  • Travel and other expenses related to research
After this initial step, a wide variety of pre-opening expenses may include:
  • Purchasing/leasing of building or machinery
  • Office equipment, supplies, utilities
  • Pre-opening payroll
  • Professional consultants
  • Insurance
  • Advertising and other costs of acquiring initial customers
  • Employee recruitment, hiring, and training
  • Setting up financial books and record-keeping
  • A wide range of professional services
  • Website and social media set-up
  • Supply chain set-up
  • Fees for incorporation, permits, licensing, or certification
  • Inventory 

Based on their research, your client may decide that the current idea will work, may make changes to the original idea, or may decide it will not work. If your client is ready to move forward with the original or modified plan, you should be there to help guide your client through the next phase of pre-opening expenses and set-up. 

Cutting corners on start-up costs...

Your client may be tempted to cut corners and leave out important steps, such as a thorough investigation of the market, demand, customer base, and competition. Sometimes in the interest of saving money, a client may be unwilling to hire experts – including engaging you in all the areas you could be helpful. Do your best to discourage your client from taking shortcuts. Thorough pre-planning can make the difference between a company that works and makes money and a company that fails – which means all the start-up costs will be wasted.

Help your client see the big picture and the ways your expertise and that of other key experts can help him or her ensure success. You can discuss more economical options for some expenses, like office furniture, but initial research, robust advertising and online presence, and high-quality products/services are essential.

Your new business client will need your guidance to develop a well-thought-out business plan that carefully outlines a realistic expectation of start-up costs, business strategies, and expected revenue over the short- and long-term in order to attract investors or secure bank loans. Your expertise will be invaluable when securing financing. Help your client weigh the options of traditional loans from banks or the Small Business Association, or through angel investors or venture capitalists.

Tax treatment of start-up costs...

Start-up costs may be one-time or recurring, tangible or intangible. Acquisition of an existing business, entering into a partnership, and other circumstances are all treated differently by the IRS tax code. Your clients will need you as their financial expert to help them choose the right business model, guide them through controlling their costs without cutting corners, and apply best practice tax principles to each cost to limit their tax burden. 

Familiarize yourself with the varying treatments of different expenses so that you can properly advise your client. The IRS Guide to Business Expense Resources provides complete up-to-date treatment of different business expenses.

The business start-up niche is a great niche to develop. Consider providing small businesses and entrepreneurs with expert services to help our small-business-driven economy thrive and help your practice grow.