Did you know that only 49% of small businesses last more than 5 years in the United States?
Companies often fail because people underestimate inflation impacts and business startup expenses.
If you want your business to last, there are a few expenses that you should know about before committing.
Continue reading to discover the most common startup expenses that you will want to be prepared for!
One of the most important startup expenses to plan for is the equipment, furniture, and materials that you will need.
Many people recommend getting small business funding with a loan to pay for the initial equipment and materials. Equipment can cost anywhere up to $100,000 or more depending on the business that you are starting. You should also have money from your investment to put towards these expenses.
Try to give yourself a reasonable budget to purchase all of these items. You can’t open your business if you don’t have everything you need.
2. Incorporation Fees
Some startup company expenses are a bit lower and only cost a couple of hundred dollars, such as incorporation fees.
Incorporation fees include setting up your business and paying those taxes, along with legal and financial fees. If you aren’t going to incorporate your company, you will still be responsible for applying and paying for federal and state permits.
At this time you should also look into the licenses that your business will need to open.
Every business will require insurance to help protect your employee’s health and the business.
Certain types of insurance are meant to protect you if customers were to file a lawsuit. There is also insurance that covers damage from natural disasters and fires. Don’t get the lowest form of insurance, as you don’t want to be stuck with a hefty bill after an accident occurs.
Did you know that payroll can account for up to 50% of your entire budget?
Payroll is a large piece of startup expenses and will vary depending on the size of your company. Depending on your business, you can hire staff as 1099 contractors or regular employees. Payroll expenses should include net pays, overtime, and paid time off.
If you don’t have enough money in the business account you will want to get a small business loan. The loan will help supplement payroll until the company is up and running.
You can’t open a business without a building (unless it is all online), which means you need to rent a place out!
Finding a building for your business should be a thoughtful process so that you are in a good location and have enough space. You will need to know how much you can put down when getting the property, along with your monthly rent and taxes.
Don’t Forget These Startup Expenses
When it comes to startup expenses for a business, there are many that you will need to budget for.
Buying materials, insurance, and paying for permits only hits the tip of the iceberg when opening a company. You will also need to have enough funding to pay your employees and purchase a building.
Working with a financial consultant will help ensure that you use your money wisely and don’t overspend in certain areas.
Be sure to check out our website for more articles about expenses for a startup business and how to make your company successful!