Capitalization of Start-Up Costs and Website Development Costs

By Gulraj Chhina | Jun 17, 2021

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Website StartupThere are many costs associated with starting and running a business, and determining whether those costs should be capitalized or expensed can provide challenges. Below is a summary of U.S. generally accepted accounting principles related to capitalization of start-up costs and website development costs.

Start-up costs are expenses related to opening a new facility, introducing a new product or service, conducting business in a new territory, or initiating a new process in an existing facility. Under FASB ASC 720-15, Other Expenses: Start-up Costs, businesses must expense these costs as incurred.

Accounting for website development costs can be trickier as more judgement is involved. There are five stages of developing a website. The following table summarizes how costs incurred at each stage are accounted for:






All costs


Website application/ infrastructure development

  • Fees for website hosting
  • Recurring payments to internet service provider
  • Costs to acquire or internally develop software tools*
  • Costs to acquire + register an internet domain

Graphics development**

It depends, refer to FASB ASC 350-40 / FASB ASC 985-20

It depends, refer to FASB ASC 350-40 / FASB ASC 985-20

Content development

  • Costs to enter content into a website
  • Data conversion costs

Costs for software employed to integrate a database with a website


All costs


* Expense if these costs 1) have no other future use and 2) are produced within the company and are part of a trial program or utilized for a particular research and development activity.

** Graphics development refers to modifications to the website to either maintain the website or improve it. If the graphics will be used in internal-use software, it should be accounted for using FASB ASC 350-40. If the graphics will be used in software marketed to third parties, it should be accounted for using FASB ASC 985-20.

Please contact us with any questions you may have regarding capitalization of costs. We are available to discuss and help you determine how to properly account for these costs.