Definition

Noun: - The initial costs incurred to establish a new business entity: Specifically refers to the expenditures associated with forming a new corporation or partnership, such as legal fees, state filing fees, and costs for organizing meetings. These costs are typically amortized (spread out) over a period of five years for accounting and tax purposes.

Usage

• This term is used primarily in accounting, finance, and business contexts to categorize and account for the startup costs of a new company.
• It is a specific accounting category, distinct from regular operating expenses or capital expenditures.
• Example:

Advanced Usage

• Amortization of Organization Expense: This is the standard accounting practice of systematically writing off the initial organization costs as an expense over a specific period (commonly 60 months).
  • Example: The company's financial statements showed the annual amortization of the organization expense, reducing the asset's book value each year.

Variants and Related Words

• Organizational Costs: A synonymous term often used interchangeably with "organization expense."
• Startup Costs: A broader category that may include organization expenses along with other pre-operational costs like market research or initial advertising.
• Amortization (n): The accounting process of spreading the cost of an intangible asset over its useful life.

Synonyms

• Formation Costs
• Incorporation Fees
• Preliminary Expenses

Notes

• "Organization expense" is treated as a singular noun phrase. It is not typically used with phrasal verbs or idioms, as it is a specific technical term.
• In accounting, these expenses are considered an intangible asset on the balance sheet until fully amortized.

Noun

1. the cost (over a period of five years) of organizing a new corporation or partnership