For many aspiring small business owners, how much it costs to start a business can make or break their dreams. There’s no definitive price tag for being an entrepreneur, but you can estimate your business startup costs before you get started.
Common Startup Costs
First, figure out exactly what you need to pay for. The major business startup expenses include:
Before you start looking for real estate, ask yourself questions like:
Don’t forget about utilities! These might include:
No matter what kind of business you’re running, you’ll need equipment, including but not limited to:
If your business is based around physical goods, you’ll need inventory. Your inventory costs will depend on:
Shipping costs can sneak up on new business owners. These costs will depend on:
Insurance
You need to be prepared in case something goes wrong. There are a few different types of business insurance. Your insurance costs may include:
Contact your state and local government to find out which licenses and permits your business needs.
Payroll
There’s no need to go all out with marketing right away, but you’ll have to spend some money on it early on. After all, you won’t be able to get customers if people don’t know you exist. Some startup business marketing costs could include:
Don’t forget about your taxes! An accounting software may work for everyday stuff, but you’ll probably need to consult with an accountant at some point. Hiring one may seem like a big upfront expense, but it can save you later on by helping you take all the write-offs you can.
It’s a good idea for new business owners to consult with a lawyer about your business structure and the laws that apply to your area. This consultation costs money. Incorporation also costs money. The exact amount depends on your legal structure. The options are:
Your business expenses will vary depending on your industry and the area you’re operating in, but you should get as accurate as possible so you can realistically plan your budget. Here are a few ways you can do that:
Once you’ve estimated the costs for each specific business expense, add them all together and make adjustments. The U.S. Small Business Administration has a handy tool that can help you out.
Get Startup Funding
Here are a few financing options for your new business:
Before you apply for a loan, create a formal report of your expected startup costs in a clear, easy to understand format. Lenders want to know what you’re doing with the money they lend you.
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