There can be many costs associated with a startup. From business registration fees to obtaining necessary licenses to operate your business, you’ll run into a lot of costs before you even open your doors. Below are 5 of the most common expenses every new venture faces and why you should be prepared for them.
Once you determine the proper entity for your business, you’ll need to register the business with your local government. From $150 to $400, this is the one-time fee you’ll pay to register your business and obtain a license to operate in your city or state. The average cost in the US is $269 and varies significantly from state to state, and even from county to county.
Keep in mind this is a one-time fee to register the business initially, but you will be required to pay an annual fee. In most states, this fee is as little as $20.
If you’re not an attorney, it’s likely your local lawyer doesn’t have time to guide you through all of the complex legal requirements for starting a business, but they will be able to answer any questions about commercial leases, establishing a business bank account, obtaining a vendor’s license, etc. Most attorneys will typically charge clients between $100 – $300 per hour depending on their needs or budget, and you’ll need to prepare for this.
And while it seems unlikely, you may need to have a reserve in case you ever have to deal with an unhappy customer who tries to take you to court. Take a look at your situation and decide if it makes sense to hire a business attorney.
Depending on the type of business you operate, you may need insurance. For example, if you operate a restaurant, you will need to purchase liability insurance. This is one of the only types that every small business should have. You can get this through your local insurance agent or online through an independent company like Bend Insurance.
If you’re an entrepreneur who wants to save money and do it yourself, consider starting off with just personal property coverage. The average cost of personal coverage ranges from $15-$30 per month for $100,000 worth of protection. You can also protect your car for about $30 per month with $60,000 in coverage for $85 total each year which is one of the most affordable rates on the market.
Payroll & Accounting
Unless you are a solo operation, you’ll need to plan for payroll and various accounting expenses. These costs can vary significantly depending on the size of your business, the number of employees you have, and the type of accounting software you choose.
Some small businesses opt for do-it-yourself (DIY) accounting software, while others choose to hire an accountant. The average cost of DIY software ranges from $50-$100 per year, while the average cost of hiring an accountant is $500-$1,000 per month.
Starting a business is no easy task. You’ll likely need to hire a consultant in your field to help show you the ropes. This person can help you navigate the complex process of starting a business and offer invaluable advice.
Consulting fees vary depending on the consultant’s experience and expertise, but typically range from $100 to $1,000 per hour. Make sure you’re prepared for this expense before you start your business.
As you can see, there are a lot of costs that come with starting a business. You have a great idea for a new product or service, but you’ll need to be realistic about what it takes to go to market with the idea. Necessary items like registration fees, business insurance and accounting / payroll fees will all go into starting a business. If you can plan for these expenses upfront, you’ll be in a much better spot to make your new business thrive.