What are some expected and unexpected expenses related to starting your own business. So you have started your business or you are thinking of starting a business. One of the big stressors in making the leap from employee to business owner is estimating how much it will cost. A very useful exercise to anyone looking to take the leap is to prepare a draft budget. What goes on that budget and how much each item will cost could depend on the type of business you are starting, but many of the below listed expenses are universal.
Will you need a physical location away from home? Unless you own the location, you will likely be looking at a lease, which means a security deposit and monthly lease payments. Most commercial leases are Triple Net, meaning the landlord expects you to contribute to your portion of property taxes, insurance and maintenance. You may also be asked to pay your pro rata share of the common utilities. Make sure to ask if water, electricity and internet for your specific unit are included, so you can budget appropriately.
Once you have your location, you will furnish it, and make sure to include any physical technology necessary to conduct business. Office furniture can include desks, chairs, file cabinets, bookshelves, tables and decorations. Physical technology consists of phones, computers, printers, copiers, wires/cables/extension cords, as well as any number of items specific to your industry. Don’t forget office supplies like paper, printer cartridges, pens and pads, staplers and postage.
Successful start ups today must invest in other, non-physical, technology as well. You will likely want a website and business accounts on your favorite social media sites like Facebook, Instagram or Twitter. There may be management software specifically related to your profession that you need to buy. Most business owners purchase some form of accounting software like Quickbooks, and probably a subscription to Office 365 so you can manage your emails, spreadsheets and word processing needs. Remember that most software companies require the purchase of additional licenses for each user added.
At the same time you are setting up your physical business, you should be working to create your legal business. You should consider hiring a business lawyer to help set up your entity. Many businesses today elect to set up as a Limited Liability Company (LLC), but some still select the traditional corporate business model. Your lawyer can discuss the pros and cons of each.
Each municipality requires you to get a business license, which includes an inspection of your office or facility to make sure it complies with local safety and fire standards.
You should talk to an accountant about setting up payroll and tax planning, as well assisting with the calculation of annual business license fees. Your accountant can also assist you with budgeting various memberships and dues, including professional memberships, continuing education, chambers and business clubs, and social organizations.
Additional providers to consider beyond and attorney and accountant as Human Resourses, Insurance, Financial Services, and marketing professionals. HR companies can help with hiring, payroll and compliance issues if you want to go that direction. Financial services professionals can help set up retirement planning, and there are marketing professionals who can help with designing logos, business cards and letterhead, and with getting your name out to customers. Your insurance agent will assist with health, liability, professional malpractice, and any other insurance you might need.
The next step is to include any franchise costs, staffing costs and any specialty items (manufacturing equipment, machinery, inventory, displays, industry specific software, memberships to trade groups, vehicles) you might need for your chosen trade.
Preparing a budget is a valuable first step for anyone considering making a leap into the world of self employment. Enlist the help of experienced business professionals, and build those relationships that will help get you started on the right foot.