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Start Up Expenses and Capitalization
Start Up Expenses and Capitalization
Capitalization
The Company will have many expenses even before we get to operate our business.
Its important to estimate these expenses accurately and then to plan where we will
get sufficient capital.
What does it cost to start a business?
Opening a new business has a way of costing more than anticipated even after
having done the best research. Therefore, an approach to resolve this is to add a
separate line item, called contingencies, to account for the unforeseeable. A rule of
thumb is that contingencies should equal at least 20 percent of the total of all other
start up expenses.
Hence contingency amount = 20% of Startup Expenses
= 0.20 x 2,12,000
= INR 42,400