Some people decide to start their businesses in hopes of building a long-term career or for the stability and prosperity that comes with owning the means of cash flow. Although this may be ideal, those who break from tradition often face unexpected costs that they had not considered before beginning their venture. Because of these unforeseen expenses, some businesses do not last as long as expected, but it does not have to be that way.
Here are five costs you should expect when starting a business.
Business Registration Fees
Most newly established small businesses, whether sole proprietorships or corporations, will have to file a certificate of incorporation or registration with the government to recognize them as a business entity legally.
As with any other government fee, this is one that many people do not consider when starting their business, but it can cost thousands of dollars depending on the state in which you do business. Although it may be more expensive to start your company in some cities than in others, you should consult an attorney and an accountant before deciding where to register your business.
Utility Costs
Utility costs may include the cost of electricity, water, phone, and the Internet. It is important to plan for these costs when starting a business, so you can be sure to have enough money to cover them.
Depending on the type of business you run, business energy rates can range from low to very high. If you experience any problems with these costs, be sure to contact your utility company for help. They may be able to provide you with low rates.
Office Space Rental
Although many think of themselves as being their own bosses, the truth is that running a successful business involves more than just thinking and working from home. If you plan to hire employees, this will require meeting space and office equipment you probably do not have.
Additionally, if you plan to conduct business in another city or state, this will also require an office location that is convenient for existing and potential clients to meet with your team members. You should expect to spend a significant amount per month on a nice office space so that your clients and employees can work comfortably.
Licenses and Permits
Regulations and permit requirements for businesses are as diverse as the number of industries that exist, but one thing is certain: businesses need to have licenses and permits to do business.
Depending on what type of business you start, you will need one or several licenses, including a tax identity number, a business license, and other licenses depending on what you plan to sell or do. These licenses may not be required in all states or locally within cities, but if you want to conduct business in any area where they are required, then you should plan on paying for them upfront.
Business Insurance
Many people do not think of insurance when they start a business. However, there are several types of insurance that businesses should buy to protect themselves.
Liability insurance is the most important because it protects you from personal injury claims or wrongful death lawsuits that could bankrupt your business. Depending on what you sell or do with your company, you may also want to get other types of insurance, such as property damage coverage, life coverage for key employees, and commercial auto insurance, which protects your vehicles in the event that they are damaged or destroyed by natural disasters.
Conclusion
Starting a business is not as expensive or time-consuming as you may think, but it does require some preparation, so you do not encounter unexpected costs along the way. Just remember to consult an accountant and an attorney before deciding how to proceed with your business, and of course, know that you can always take additional steps to reduce the costs of starting a business.