Objectives: 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.