How to Write a Business Plan by Mike McKeever

Author:Mike McKeever [Mike P. McKeever]
Language: eng
Format: epub, pdf
ISBN: 9781413323207
Publisher: Nolo
Published: 2017-03-22T16:00:00+00:00

Prepare Your Capital Spending Plan

Your capital spending plan includes all the things you have to buy before your business begins bringing in sales revenue, including opening inventory, fixtures and equipment, business licenses, deposits for the building lease, and whatever else you need.

Common Items in a Capital Spending Plan

Here’s a list of common items businesses need to buy before opening. Note that they fall into two categories—capital items and expense items.

Capital items generally have a useful life of more than one year and can be depreciated for tax purposes. They include:

• permanent signs, heaters, air conditioners, and cooking and refrigeration equipment

• equipment, including machinery, large tools, and other expensive items

• racks and display fixtures for retail selling areas

• office furniture

• leasehold improvements or any alterations you make to the building, including walls, bathrooms, and carpeting, and

• computers, printers, cash registers, phone systems, and other small equipment you purchase.

Expense items generally are shown as either fixed expenses or costs of sale at the time they are purchased because they last less than one year. They include:

• opening inventory (sometimes you can get a deferred payment schedule from suppliers, but you will usually have to pay for many, if not most, goods before you sell them)

• lease deposits

• tax deposits

• business licenses and permits

• opening marketing and promotion

• insurance

• telephone installation

• utility deposits

• office supplies and stationery

• legal fees, costs to incorporate, and CPA fees to establish your business, and

• a contingency reserve.

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