---
title: Capitalization of Start-Up Costs and Website Development Costs
description: Bellevue CPA shares captialziation of start-up costs and website development costs
image: https://blog.sweeneyconrad.com/hubfs/Website%20Startup.png
---
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# Capitalization of Start-Up Costs and Website Development Costs
By Gulraj Chhina | Jun 17, 2021
[](https://blog.sweeneyconrad.com)
INSIGHTS/BLOG
There 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:
| **Stage** | **Expense** | **Capitalize** |
| --- | --- | --- |
| Planning | All costs | N/A |
| 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 |
| Operating | All costs | N/A |
\* 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.
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