21 Startup Costs Every Business Owner Should Know

Cody Cromwell
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Tips to Estimate Your Startup Costs

For all the talk you hear about starting a business and being your own boss, starting a business is never cheap, especially when you’re first getting started. In fact, startup costs can run quite high. But there are a few tips and tricks that are worth knowing so you can set your expectations correctly and begin your journey with confidence.

We’ve listed some of our favorite startup costs below, along with some tips to help you estimate your expenses.

Business Tax Expenses

General business expenses fall into four categories: business expenses, operating expenses, working capital expenses, and general expenses. Business expenses are expenses incurred in the operation of your business, such as payroll expenses, rent, supplies, advertising, and so on. Operating expenses are expenses incurred as part of doing business, such as office supplies and utilities. Working capital expenses are costs you incur financing your business, such as interest expense, loan fees, and so on. General expenses are costs that do not fall into the other categories, such as travel, supplies, and so on.

Business income tax expenses are the expenses you incur to prepare for income taxes for the year. This includes tax return preparation, record keeping, tax advice, and so on.

There are four types of business income tax expenses:

  • Payroll taxes
  • Property taxes
  • State Franchise or Employment Taxes
  • The Federal Insurance Contribution Act (FICA) tax

Business tax expenses can be reported on the normal business income tax return (See Form 1120 for Individuals, Form 1120-F for Corporations, and Form 1120-H for Tax on Certain High-Income Individuals). You can include these expenses on your tax return, or you can elect to be excluded from net income.

Business Plan Software Costs

Before you can begin to understand how much your business plan software will cost, you need to know exactly what you’re getting for your money. That’s because there are dozens of different business plan software programs on the market and you don’t want to choose one that isn’t going to meet your needs.

You have to decide whether you’re going to go with a fully custom business plan software or a business plan software that’s more utilitarian. Custom software is intended to be used by only one company and can be used for multiple planning strategies. It’s adaptable and customizable, but you’ll pay a premium for it.

Here are just some of the business plan software features you can find in both custom and more utilitarian software.

Complete set of business plan tools … Research, writing, planning, formatting, and exporting.

A number of templates … You can find templates for business plans of all types.

Widgets, calculators, and writing aids … If you’re writing your business plan you’ll want to have all the tools available.

Market Research Expenses

Research and development is the fastest-growing area of the startup market. In 2012, nearly one in every three dollars of equity funding was going to startups with engineering staff in the U.S. So where do you start to build a team that has the necessary skills?

What are the core areas that every successful team should have key people in?

Accounting Costs

Accounting is an essential function of business. That’s why you’ll need to be prepared for the costs that come with it. Most startups tend to underestimate the associated costs of a business, which leads it to having financial shortfalls and cash flow problems.

One of the startup expenses is accounting. By hiring an accountant you can ensure that your business is running smoothly. From saving taxes to handling your payroll to checking your monthly expenses, accounting costs can get expensive relatively quickly.

A self-employed account is not something that’s feasible, since you’ll need to worry about bookkeeping, a separate accounting software, and more. If you’re a startup entrepreneur, it’s essential to hire a bookkeeping firm as you grow and build your business.

Payroll Expenses

Let’s take a closer look at payroll expenses – the various costs we pay to employ employees, our largest cost. These expenses are incurred in three different areas:

Salaries and wages. We need to pay the employees at the beginning of the month, and must pay them the full amount due by the tenth of the month. These are the most obvious payroll expenses. Employers also need to set up a payroll system. This includes a personal computer, specialized software, a printer, and any specialized equipment (such as a barcode scanner). In addition to providing us with information on how much we need to pay out, it also protects us from making mistakes. payroll taxes. Payroll taxes are money paid to the government in order to support our employees. These taxes include Medicare, state income tax, unemployment insurance, worker’s compensation insurance, social security and railroad retirement taxes. In addition to these payroll taxes, we have to file quarterly tax reports. If you want to keep a relatively accurate account of your business expenses, you’ll need to file these reports. employment benefits. Benefits are the additional things we offer to our employees. These may include health care insurance, pension plans, and supplemental benefits such as dental insurance and life insurance.

Employee Wages Cost

Chances are that if you are engaged in any business enterprise, you are also thinking of hiring employees to carry out operations that you need executed. The next problem you should ponder is how will you pay your employees? Simply put, the expenses that you incur while employing your employees need to be absorbed and debited from your revenues. In the end, the net profit will determine how well you are doing.

For those who want to know how much it cost to employ an employee, for a month, the amount may range from ….

Minimum Salary Charge

The basic salary payable by the employer to the employee is known as the minimum salary charge. The minimum salary charge which employers have to pay is …

A. Daily Rate 28.67 ‘ Wage Board of India, 1969

B. Gross pay

C. ‘S’ Grade Pay (inclusive of grade pay)

D. ‘A’ Grade Pay (inclusive of grade pay)

E. ‘B’ Grade Pay

F. ‘C’ Grade Pay

Professional allowance

I. According to the recommendation of D.G.

Office Utilities Expense

A simple, yet often overlooked expense, office utilities is definitely a startup category that every business can benefit from. After all, it’s the easiest way to quantify the amount of electricity or gas you’re going to use to run your business. It’s also the easiest way to compare the price of office utilities between businesses of different sizes.

However, there are a few things that you need to consider before you run out and purchase your first month’s utilities bill –.

Decide on the level of maintenance necessary to keep your office space functional. When is the last time you replaced your light bulbs? Keeping an eye on that efficiency is a good idea in any business setting. Are you comfortable with the amount of ongoing maintenance your business requires at a regular basis? Your needs may vary, but you need to have a reasonable expectation of how much time, money and effort you’ll be spending on it 6 months in. Does the office space have a HVAC unit? Factoring that into your electricity bills can make you more comfortable with your monthly spending.

Traditional Marketing & Advertising Costs

With the rise of digital marketing in recent years there has been a growing emphasis on startups using new technologies to spread the word about their businesses. These include the use of digital marketing tools and other means of reaching an online audience that doesn't cost much, or at all.

However, that doesn't mean that physical marketing and advertising requires and should be ignored. In fact, it's these traditional offerings that have a huge role to play in boosting your marketing efforts.

Most people become entrepreneurs to build their own businesses and to become financially independent. But they often overlook the importance of marketing. It doesn't matter if your product is the best on the market; if people can't find out about it or don't even know that it exists, it's destined to fail. Even if it does do well, without a wide spread awareness it will struggle to survive.

There are a few key factors to getting your message out there. These are things that you can decide to do in-house or outsource. Your choice should rely on how much you can afford (or want to spend) on marketing efforts.

Here's an overview of the main expenses you'll encounter during your business's initial stages:

Digital Marketing and Social Media

These costs are often found on your marketing budget and are unavoidable. However, you'll need to decide in advance whether you'll use them as a supplement to other forms of marketing, or on their own.

Online Advertising Expenses

One of the hardest, but most important things to consider when starting your business is startup costs. But what does that really mean? Average startup costs can differ between industries and companies. If any of the following expenses are new to you, make sure to research them further to make sure that the costs are in line with your goals and expectations.

Startup costs are an integral part of starting a business and are not typically reimbursed by investors. While you may want to cut startup costs in an effort to save money, losing money from day one can be a deal breaker for investors and future funding opportunities. Instead, be smart about your startup costs while delivering something unique and beneficial to your customers.

Office Supplies Costs

When you think about business startup costs, most people can’t even begin to imagine what it entails. Well, the truth is that it’s more than what most people will ever be willing to put into their own businesses.

The truth is, unless you already have a lot of money, a business will probably cost you a lot. And it won’t surprise you to learn that there are startup costs for any kind of business, from an online venture to a brick and mortar shop. Of course, some business startup costs will be higher than others.

One of the expenses every business owner should know about is office supplies. If you’re thinking of setting up a new office, there are a few office supplies that you’re going to have to know about.

Location Expenses

Startup costs are just that; startup costs. The more you can predict them, the better.

It is generally a good idea to start your company on a shoestring. When it comes to the actual startup costs, however, you will find that even the smallest business needs some financial support.

In this post, we will take a look at just some of the startup costs that you will have to consider. As a business owner, you will have to keep these costs in mind when setting up your business.

Office or Home

Your business location will affect a lot of things, including startup costs. Your business location could be in your home or you could get a small office.

When you start a business on a shoestring, the office or your home will be your office, and you will do a lot of your business there. However, to keep things simple, get a small desk and computer so you are not spending too much time working at home, either. You want a real office, which will cost you a little bit of money. The more capital you have, the better office you can have, and it will allow you to attract some investors.


Whether you need to connect to a local network or a big Internet provider, it will cost you.

Equipment Costs

Depending on the type of equipment you’re planning to purchase, the costs associated with infrastructure resources such as power or broadband, or insurance and security deposits may be part of your startup cost.

Depending on the equipment you need and how large it is, the prices can vary considerably. Memorizing the various categories of costs can help you determine how much you will spend upfront when you open your business.

If you’re not sure what the startup costs might be, doing some research can help you discover the best solution for your needs. Before you start your startup, it’s important to plan the cost of various infrastructure, including power, broadband, security, and insurance. To get a rough idea of the costs of each of these additional services, see if you can find reliable historical data to help you estimate your startup costs.

It’s also a good idea to talk to colleagues, keep up with industry news or researched news stories, or talk to potential vendors and partners to learn what people are experiencing so you can be prepared for the unexpected.

Insurance Expenses

Business owners can take out regular insurance policies as per their requirements. Though they are mandatory, it should be done depending on the business.

This is especially required by the startup business. Most kind of insurance policies are there for the business. It covers the minor risks like fire and theft etc. However, there are some critical points, which should be taken into consideration.

A business insurance policy has to be bought well in advance, so it would take a lot of money. It involves a lot of effort and much money is required. It is important to note these points thoroughly as soon as possible.

A business owner should look for the ways to save their money on the business insurance. Though it has to be purchased in advance, it doesn’t mean that he should spend a lot of money. Instead, they should know the ways to make a living in the best manner, without spending too much money.

There are two ways to save money on the insurance policy-reduce the deductible and reduce the cover. In most of the cases, a small and less expensive insurance policy has to be purchased with a high deductible. Though this is usually the situation, but small and less expensive insurance plans are not enough to cover the startup costs.

Borrowing & Interest Fees

A good way to get the startup costs down is by utilizing a zero-interest loan. When you use a company like GoSmallBiz, your amount is put on hold as a payment on the loan. The difference, which usually comes out to about 5% of the total amount, is taken from your account to be used for the purchase of the business or the purchased item itself.

For example, if you borrow money to invest in a franchise or trade show exhibit, you’ll need to pay interest on the loan. If on the other hand you take a loan from GoSmallBiz, the money is taken from your account to be used for the purchase of the business. However, GoSmallBiz will then be sending you a check every month until the loan is paid off.

When the business comes to an end, you’ll be able to get your money back in two ways: Return of the money you were advanced and get fixed.

In many cases, the business will cease to exist and you’ll be able to get your money back with interest. However, you have to be careful to never default on the loan. If you do default on the loan, you’ll be responsible for paying the GoSmallBiz organization back.

You could also be responsible for all interest and penalties nonetheless.

Inventory Costs

When you start a business, you’ll probably need some infrastructure (computer equipment, furniture, or a storefront, for example). You can’t count on this being cheap or even free, so be prepared to spend some money. On the other hand, depending on the type of business you have, many of the costs associated with starting your business will likely be fixed, and there will be little or no opportunity cost to the money you spend. For example, to start a computer consulting business, you’d have to pay for the equipment (office space and equipment), the Internet connection, and the building in which you have to put everything together.

Although most startup costs will be fixed based on the type of business you have, there are some other fixed costs you have to take into consideration as well. Some common fixed costs include:

You have to pay workers who are responsible for handling your company’s payroll and accounting.

You also have to pay a substantial amount in taxes, usually associated with selling your product.

You may also need to pay a small amount of money for health insurance.

Depending on the type of business you have, you may also need to apply for permits and licenses, and you may even have some fees associated with doing business in your area.

Professional Consulting Expenses

A professional business consultant is someone who is attached to you in the business arena. He can take your money and produce dismal results or produce amazing results with the money that you’ve given him. You need to hire someone to do the consulting who is in your field with you and who has been typecast with your companion. You should stand firm in your decision and ensure that you’ve done a background search on the consultant. A consultant who is in good problem solving skills is what you need to ensure that you have in your list of professional suitors. Keep your ears open to the consultants’ demands and if you are uncomfortable with the demands, it’s best that you don’t hire the professional counseling.

Lifestyle Photo Expenses

POS Software Expenses

One of the main expenses to consider when you create your POS system is the user interface. How you set it up on the register will dictate how easy it is for the user to both enter and edit prices.

The POS software you pick should have a variety of styles to match the look and feel of your business. Additionally, it should do its best to offer you as much customization as possible, so that you can create a unique and exciting look for your business.

Here are some of the fees included in POS software:

  • User licenses
  • Static tables
  • Function editor
  • Virtual checkout
  • LEKs
  • Business forms
  • Alarm keys
  • Special sale items

Here is a breakdown of some of the additional expenses:

  • The Billing module
  • Mobile app
  • Outlet management
  • Weekly service
  • PC support
  • Installations

In this area, you will be charged by the credit card machine that you choose. Each type of machine will usually have its own set of costs.

Here’s a rundown of some of the costs associated with credit card machines:

  • Type of terminal
  • Type of software
  • Monthly support
  • Hardware changes
  • Releases

Type of credit card machine used by most brazilian start ups.

Website Costs

Travel Expenses

Bottom Line

There is no easy way to predict exactly how much it will cost to begin a business. I spent a couple years fine tuning my own process to come up with a rough estimate.

If you want to get started and figure out the value of all the work involved, then you want to make sure you are accounting for all the costs.

Most Business owners spend so much time and energy trying to figure out how to get people to sign up for their business, and then they forget to figure out the value of all the hard work and time it will take to make money. It’s easy to make money, but it’s hard to make money consistently. You need to be able to give your customers a good return on their investment.

Something different, useful, and valuable in exchange for their purchases.

I’ve always considered a stable, consistent income to be one of the most important things for business owners to focus on.

If You Take One Thing Away from This Post…

The hardest part about starting a business is figuring out how much all the work is worth. There are a lot of unknowns, such as competitors, market size, etc. So instead of just trying to start a business and figure it out as you go, I highly recommend you spend time before hand figuring out your costs and your process for making money.