Session 6: Basic Numbers, Part 1

In this session you will learn:

  • The difference between ‘startup’ and ‘ongoing’ expenses
  • How expenses vs. assets are treated for tax purposes
  • The difference between profits and cash


Start-up expenses happen before the business is running. If expenses come after the start of the plan, they are ongoing expenses. Ongoing expenses belong in the profit and loss table.


Expenses: Items or services paid for that a business can deduct from income for tax purposes. Common expenses are rent, salaries, advertising and travel.

Assets: Property that a business owns, such as cash and inventory, office equipment, buildings, accounts receivable, and investments.  Assets cannot be deducted from income for tax purposes.

Costs of Goods Sold (COGS): The costs of materials which are used to make the goods a business sells. These costs vary in direct proportion to the amount of goods sold.

Sales Forecast: The planned sales a business expects to make in the future; this may be shown by months and/or years.

Liabilities: Debts; money owed that must be paid. Short-term (current) are generally debts to be paid in less than five years; long-term debts are generally for longer than five years.

Capital Input: New money invested in ownership in the business, not as loans or payment of loans.

Please click on the link of the book set for your course and locate the Required Readings for this Session:

The Business Startup Kit, The Art of the Start, The Plan-As-You-Go Business Plan 

3 Weeks to Startup, The Art of the Start, The Plan-As-You-Go Business Plan


These resources provide ideas from other business and marketing experts. They are not required reading for this session.

Business Plan Financials
(9-part video series)

This series is about 30 minutes long. It talks about the six key financial building blocks. It also gives examples of how they come together in the three main statements — income, balance sheet, and cash flow.