Most business expenses have to be “expensed” on the company’s financial statements as incurred and do not appear on a company’s balance sheet. Other expenses are “capitalized” as an asset and depreciated over their “useful life.”

Organization costs include legal fees associated with forming a new corporation, partnership or Limited Liability Company. Organization costs must be incurred before the end of the first tax year in which the business entity was established. Organization costs do not include the legal, travel and other costs associated with soliciting investors.