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By Nickie on April 23, 2018
Thinking of starting up a new business? Great!
In your excitement to launch and market your product, hire staff, secure financing, and set up your website or shop, it’s easy to miss or misjudge a few important startup costs. Yet neglecting these often-overlooked expenses could result in a cash crunch before your business even gets off the ground.
Don’t forget to budget for these six small business startup costs.
1. Business Insurance
While you hope nothing goes wrong when you’re launching a new business venture, sometimes it does. Not having business insurance in place could leave you struggling to pay for expenses you didn’t budget for while you’re trying to finance a new business.
Every small business is different, so choose the insurance coverages best suited for your situation. Business property insurance helps to protect your workplace location and property like tools and equipment, while general liability insurance helps protect your new business from claims for bodily injury, property damage, and other personal claims.
Business income insurance helps protect income lost when you can’t operate due to covered losses such as theft or fire. And don’t forget to protect your family against income loss with your own life insurance and disability insurance.
2. Fees and Licenses
Among other often-overlooked startup costs are the fees associated with establishing a business. You may have to pay to search and register your business name. Depending on your business location and the nature of the business, you may need federal, state, and/or municipal licenses and permits. The costs and requirements will vary.
3. Utility Bills
While you probably studied the commercial rents or property values in your area pretty carefully when budgeting for your startup costs, did you consider your other monthly utility expenses? Your startup operating expenses include more than just your office rent, lease payment, or mortgage. Depending on your business and location, your startup utility bills could also include:
Heat and/or air conditioning
Talk to other business owners in the area to get an idea of the typical costs based on the square footage you’re considering.
4. Professional Expertise
Don’t underestimate legal fees and accounting fees when estimating the costs to start a new business. Paying for good advice regarding your business structure, legal agreements, and financial issues early on in your business can help you minimize or avoid costly future legal or tax entanglements. Get quotes from two to three professionals, so you’ll have a realistic idea of the costs you’ll incur.
There’s no getting away from paying taxes, even when you’re starting a new business. Find out what municipal, state, and federal taxes your startup must pay and when.
State and municipal taxes vary, so visit the U.S. Small Business Administration website for details pertinent to your location. At the very minimum, expect to pay state income tax and state employment taxes if you have staff, plus your federal business taxes, depending on your corporate/business structure.
6. Payroll/Bookkeeping Fees
Whether you have an automated online system, a bookkeeper who visits your office, or a virtual assistant, don’t forget to account for this important monthly cost. While a bookkeeper may charge anywhere from $20 to $50 per hour, a monthly flat-fee arrangement may be better, or you may opt for a subscription to an automated online payroll and bookkeeping program.
Starting a new business is a risk. Minimize your risk of failure and maximize your potential for success by realistically budgeting for all types of startup costs. This way you’ll be better prepared financially to handle the unexpected expenses that are bound to pop up.
By Nickie on April 16, 2018
You are in college and it is the summer. You decide to paint houses to make a little pocket money. A neighbor of yours is interested. You look at his house and then figure out the cost of the paint will be $500. Would you charge him $500 to paint the house?
Please say no.
By Nickie on April 9, 2018
1. Read the Colorado Business Resource Book 2. You should register with the Secretary of State 3. You should get a Federal EIN # 4. If you have employees, it is recommended to set up a wage withholding account and unemployment insurance tax 5. To view information about Colorado taxes, check out the tax and […]
By Nickie on April 2, 2018
1) Speed a. An acquisition provides instant scale and great opportunities for efficiency. Whereas starting from scratch is a time consuming process and does not come with any success guarantees. 2) Market Power a. Building market presence takes years worth of time. Acquiring a new business gives the business owner a higher percentage of the […]
By Nickie on March 26, 2018
It is never too early to begin planning for a strategic exit from your business! While we like to think we are in control, you can never know what the future holds that could throw us off course. Putting in place a sound plan to exit your business will help facilitate a faster exit when the time comes and can provide for a higher return on investment.
By Nickie on March 19, 2018
Some companies dive in without thinking about their strategy. They open lots of accounts without doing enough background work. This approach won’t give you the best results.
By Nickie on March 17, 2018
It’s that time of year again: long nights at the office, a seemingly infinite inbox, lunch and sometimes dinner at your desk. It’s easy to have an out of body experience when you’re sitting at your desk for upwards of 10 hours every day. Remaining present during what is a busy and stressful time is key in order to avoid burnout and ensure quality work. Here’s how you can do so.
By Nickie on December 25, 2017
Traditional advertising costs money, sometimes big money. Printed ads, radio spots, magazine spreads, billboards and online banners are ubiquitous, but may not be as effective as marketing that doesn’t cost you a dime. Here are a few tactics to invest in, not in terms of dollars, just in terms of a little time.
By Nickie on December 11, 2017
What costs business leaders more than $2,000 per employee per year in lost productivity? A disengaged staff that underproduces and seldom innovates.
Employee disengagement is serious business.
By Nickie on December 4, 2017
Are you putting together a business plan? Well, good luck with that. I’ve seen lots of business plans over the past few decades that have been prepared by many well-meaning business owners for themselves, their bankers and their investors. Just about all of them have been useless.
Want to know why? It’s almost always one or more of the following three reasons.