---
title: How to Record Startup Costs in QuickBooks
description: In this article, learn the common expenses in establishing a business and how to record startup costs in QuickBooks Online.
---

[Accounting Blog for Business ](https://www.dvphilippines.com/blog)

# [How to Record Startup Costs in QuickBooks](https://www.dvphilippines.com/blog/how-to-record-startup-costs-in-quickbooks)

 Written by [Mary Milorrie Campos](https://www.dvphilippines.com/blog/author/mary-milorrie-campos) | Apr 22, 2021

New to QuickBooks Online and business accounting? In this article, learn the common expenses in establishing a business and how to record startup costs in QuickBooks Online.

Due to its user-friendly interface and extensive features, QuickBooks Online is considered one of the [top cloud accounting software for startups](https://www.dvphilippines.com/blog/top-10-small-business-cloud-accounting-software-of-2020). Using this software instead of Excel allows you to have a well-organized accounting system right from the start.

Read next: [Excel vs Accounting Software: Which is Better?](https://www.dvphilippines.com/blog/excel-vs-accounting-software-which-is-better)

 

## **Common startup expenses**

Before we proceed to the process of recording costs in QuickBooks Online, let’s take a quick look at the common startup expenses you may encounter: **business startup costs **and **organizational costs.**

Business startup costs are the expenses you incur before officially opening your business. It includes, but is not limited to market and product research, customer surveys, office selection offices, advertising and marketing, and wages and salaries for staff training.

Meanwhile, organizational costs are the expenses intended for the actual formation of your startup company such as incorporation, partnership, accounting, and other legal and consulting fees.

[According to the Internal Revenue Service (IRS)](https://www.irs.gov/pub/irs-pdf/p535.pdf), expenses under these two categories are considered as **capital expenditures**. Under normal conditions, you can deduct up to $10,000 of business startup costs if its total amount exceeds $60,000. For organizational costs, you can reduce up to $5,000 if its total amount is over $50,000. You can also amortize any costs that are not deducted over a 180-month period. 

Once you understand what these costs are, including the deductions you can apply, it’ll be easier for you to use QuickBooks in accounting for startup costs.

 

## **How to record your startup costs in QuickBooks Online**

Follow these steps when setting up your capital equity account:

1. In your QuickBooks account, click the **Lists **menu located at the top navigation bar.
2. Select **Chart of Accounts**.
3. Next, click the **Account **button at the bottom of the list then click **New**.
4. Select **Capital **account type then **Continue**.
5. In the **Account Name field**, type *Owner’s Equity* or *Owner’s Capital*.
6. Open the **Lists **menu again and click **Chart of Accounts. **Select **Owner’s Equity **or **Owner’s Capital**.
7. Click the **Activities **button at the bottom of the list.
8. Click **Use Register**.
9. Next, select the **Increase **column. 
10. Type the expense amount then indicate the description for the transaction. Click **Record**.
11. Repeat this whenever you need to record a new transaction.

If you need to **reimburse startup costs** you’ve paid using your own money, it’s crucial to keep records in QuickBooks for transparency. Here’s a direction you can follow:

1. Create a new journal entry.
2. Add the preferred bank account you can use in reimbursing your personal funds.
3. In your QuickBooks account, hover to the **+New **button located in the left menu.
4. Select **Journal Entry **under **Other**.
5. Indicate the **Journal date**.
6. Choose the **expense account** you've created for the costs on the first line. 
7. Enter the amount in the **Debits **column.
8. In the second line, select **Owner’s Equity **(or Partner’s Equity).
9. In the **Credits **column, enter the same amount you’ve stated in debits.
10. **Save**.

While there are instances where you’ll need to shell out money from your pocket, it’s still vital to separate business from personal expenses. 

 

## **Customizable accounting support for startups**

Unless you have sufficient knowledge in accounting, it will be a smarter move to [get the help of an accountant](https://www.dvphilippines.com/accounting-solutions/sme-business-owners) when setting up your QuickBooks account. This way, you won’t lose significant time trying to make sense of its technicalities.

[View full post](https://www.dvphilippines.com/blog/how-to-record-startup-costs-in-quickbooks)

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