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Old 11-23-2016, 06:17 PM
Yogi Bear Yogi Bear is offline
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Category type for start up costs

Hello, I'm opening a yoga centre and need to categorise the start up costs -builders, electrician, floor/carpet fitter etc. The nearest category I can see is maintenance but is there a way of creating a new category type like "start up costs"?
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Old 11-23-2016, 10:44 PM
Lorin Browning Lorin Browning is offline
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Yes, but where you put it depends upon your tax code.

Are start-up costs deductible in the year of start-up, or are they amortized over a period of time? If the former, add a new expense account to your chart of account. If the latter, add a new current asset account to your chart of accounts. A name such as "Start-up Costs" would be appropriate for either.
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Old 11-24-2016, 07:04 PM
Yogi Bear Yogi Bear is offline
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Thanks for your reply. Could it be that the costs of the refurbishment (paying builders and so on) would be deducted in the first year but paying back the loan that was used to for the refurbishment is spread over a number of years (in this case 5)?
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Old 11-25-2016, 12:40 AM
Lorin Browning Lorin Browning is offline
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The loan itself is not a cost to the company. The interest paid on the loan is an expense, which is entered periodically as loan payments are made.

Consider the transactions involved:

There were assets purchased (which in your case went on the books as startup costs) and the amount of the loan went on the books as an accounts payable (a balance sheet account).

As loan payments are made, there are three separate entries to be entered:
  • a reduction in the bank account (which is a credit entry to a balance sheet account)
  • an expense to an interest expense account (which is debit entry to an income statement account)
  • a reduction to the accounts payable (which is a debit entry to a balance sheet account)
Paying the note with a check automatically makes the credit entry for you when you specify the appropriate bank account, but you have to make two entries in what QuickBooks misleadingly labels as "Expenses" -- one to the interest expense account, and the other to the accounts payable account. Only one of these QuickBooks-called "expenses" is an actual expense, but both will be treated as debit entries to the two accounts.
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