Making the decision to start a business is thrilling, but it may also be stressful if you’re a first-time business owner. Calculating beginning costs, thinking about long-term profitability, and acquiring startup capital are all tough tasks.
Certain types of organizations, such as microbusinesses and home-based businesses, fortunately, have reduced financial entrance hurdles. We’ve compiled a list of ten distinct sorts of business startup fees to think about when launching your firm.
9 business start-up costs to consider
Despite the fact that this is a common list of eCommerce business start-up costs, your real startup costs will depend totally on your particular firm and industry.
Here are some common beginning expenses to consider:
1. Equipment: $10,000 to $125,000
Almost every company will have an immediate need for equipment financing. Depending on the industry and the size of the business, startup equipment costs can range anywhere from $10,000 to $125,000.
For instance, if you are launching a moving or shipping business, you will need to finance trucks. You will need commercial-grade ovens, stoves, dishware, and cooking tools to open a restaurant. If you own a hair salon, you’ll require styling chairs. And, virtually every firm will need computers.
Obviously, these expenses vary based on your industry and the size of your organization. In addition to the cost of hiring staff, you may also need to purchase individual equipment.
2. Fees to start a business: less than $300
When you start a business, one of the first things you have to do is choose a business entity, which has tax, legal, and financial effects.
If you want to incorporate your business or make it a limited liability company, you’ll need to file articles of incorporation or articles of organization with your state.Depending on the state, the filing fee can be anywhere from $50 to $725. But, in most states, the fee is less than $300.
Even if you don’t form a corporation, you may still need to apply for licences or permits from the federal or state government. Depending on your industry and location, you may need different kinds of paperwork. For example, federal licences are needed for businesses in the agriculture and aviation industries. Some service-based businesses may need licences that are specific to their trade. And stores will likely need licences or permits for sales tax.
3. Office space: $100 to $1,000 per worker per month
Whether you rent or buy, the cost of renting an office or store space will be a big part of your fixed costs. You could spend anywhere from $100 to $1,000 per employee per month, depending on the type of space you use.
You can also cut down on these costs if you start out by working from home or by looking into coworking spaces, both of which are great for small businesses. And if you run a service-based business, you can cut costs even more by going directly to clients.
4. Inventory: 17 to 25 percent of your total budget
Whether you work in retail, wholesale, manufacturing, or distribution, you will probably need to get the stock to sell as soon as possible.
It can be hard to know how much stock to carry: If you have too much stock, it could go bad or get broken. If you don’t have enough, you might lose customers who won’t wait for items that are out of stock. This is especially true for seasonal businesses, where the amount of stock can change a lot throughout the year.
Similarly, depending on your business, you should spend between 17 and 25 percent of your budget on the stock. When you’re just getting started, you might want to get more inventory. At the beginning of your business, you’ll want to get as many customers as possible and make as much money as you can.
5. Website: $40 per month or so
When you build a website for your business, you’ll want it to make professional, be easy to navigate, and show information about your services, products, hours, and how to contact you.
Services like Wix, Squarespace, and Weebly make it easy and cheap to make a website. Some of these content management systems are free, but the paid plans cost a monthly or yearly fee:
- A premium plan for Wix costs between $13 and $39 per month.
- Squarespace: $12 to $18 per month if you pay for it yearly, or $26 if you pay each month.
- Weebly costs $5 to $25 a month.
Wix and Weebly also have free website builders that are simple. With one of these services, you don’t need to know how to code to build a website if you’re fairly tech-savvy. But if you don’t know much about computers, you may want to hire someone to build the site for you. This will cost you more money
6. Furniture and supplies for the office: 10% of the overall budget
Purchasing office equipment and supplies may get expensive. In a typical nine-to-five office, every worker needs a desk, a chair, a computer, and a phone. Small office supplies and computer programs like your accounting software might add up to a significant cost.
Again, the amount varies based on the tools your company requires to run and the number of staff you need to employ.
7. Utilities: Around $2 per square foot for office space
In addition to the fixed costs of rent and down payment, you will also have to pay the electric, gas, water, internet, and phone bills for your office space.
If you want to install heating, ventilation, and air conditioning (HVAC) units, that will cost you more money—usually, a couple of thousand dollars, and installation fees and maintenance are an additional expenditures.
8. Payroll: 25 to 50 percent of your total budget
Even in the beginning, when you’re not making much money, you have to pay your employees. Remember that the following are all part of the payroll:
- Net pay.
- Bonuses.
- Commissions.
- Pay for overtime.
- Paid vacation time.
Payroll costs will, of course, be different for each new business. Most employees cost between 1.25x and 1.4x their salary. For example, a worker who makes $40,000 a year will end up costing you around $54,000 after taxes and insurance are taken into account.
9. Professional consultants: $1,000 to $5,000 per year
It can be tempting to do everything for your business on your own. But it can be worth the money to work with experts and professionals.
Certified public accountants, for example, may explain the various legal structures, assist you in selecting an employee benefit package, and ensure you’re performing your responsibilities as an employer. When tax season comes, they’ll help you file your returns and find ways to save money on your taxes.
You don’t even need to hire an accountant full-time. But it’s usually a good idea to talk to your accountant once a month, three times a year, or once a year to go over your financial statements and get general financial advice. Regularly talking to an attorney can also keep you from making big legal mistakes, like not getting a trademark for your logo or working with vendors without a contract.
Every accountant and lawyer has their own hourly rate. Rates and extra fees depend on how many and how hard the tasks you want to outsource are, how long it takes to finish your projects, and how long your consultant has been in business. But you can cut down on these costs if you do some simple tasks yourself and only outsource the most difficult ones. There are even some ways to get free legal help for your business.
And with good business accounting software, you can take care of basic bookkeeping tasks like processing and managing payroll, making and keeping track of invoices, and managing your business bank account.
Conclusion
One of the most hectic parts of running a business is making a budget for it. But being honest about how much money you may have to borrow right away and how much it will cost to start your business will go a long way toward acquiring your business up and running.
