So, you’re starting a business? Well, watch out for these hidden startup costs. Have a plan and budget out your first year in business to help prevent financial hardships.
These are the top hidden startup costs your company needs to look out for.
No matter what business you’re running, the technology necessary to operate is expensive. And you’ll need to add more every time you hire an employee. Don’t let this take you off guard and throw a wrench in your mojo. These items will help you manage your business more efficiently and protect company information.
- Mobile devices
- Data security
- Storage procedures
Be sure to research federal industry regulations, local requirements, and file the necessary paperwork to ensure compliance. Remember to apply for a tax identification number, too. Also, be prepared that if you plan to operate in multiple states you could face multiple fees for your business license.
Finding professional help when starting a new business venture is a must. Their expertise will protect you from a laundry list of headaches. Footing the bill for an attorney is probably a good idea when starting a business. As a startup, you must choose how you wish to organize. Will you be an LLC, Corporation, or partnership? Knowing which option is best for your business is tricky, but an attorney will provide knowledge on the facts of each type. The attorney can also help when banks and investors request operating agreements and articles of incorporation.
Are you an accountant? No? Even in a small business, hiring an accountant can take an immense load off your shoulders. Although hiring these professionals is an additional cost to your startup, having them on board will save you time and headaches.
A surety bond is a government regulation for a number of different industries, often required for businesses that offer a service to consumers. The surety bond is meant to deter unethical business practices. Try to determine whether your business requires the use of a surety bond early on. Many businesses find they have to pay a premium anywhere from $100 to $20,000. You’ll want to make sure that cost is budgeted into your plan.
This could be one of the most important costs your business will encounter. Limit your exposures and protect your investments by obtaining the necessary coverage for potential liabilities. If you have employees, you’ll want to consider employer’s liability insurance or alternatives like Alternate Dispute Resolution. You might need public liability insurance in case you are sued by a member of the public. There’s also the possibility that a client makes a claim against you for negligence. You might also want to explore property insurance. A professional attorney should help you determine what precautions you need to take.
Even a startup operating from a garage will require some sort of equipment. You want to maintain a professional atmosphere, you NEED reliable internet access and a separate business phone number. You might even need to lease a business P.O. Box. These examples all cost money that could put your business in a financial tight spot.
What good is starting your new company if you can’t tell people about it? Budget in marketing expenses like website hosting and design services, logo design and branding, business cards, mail marketing campaigns, and giveaway items like pens or magnets. All of these items are essential to increase your brand awareness as you get started.
The Ongoing Stuff
We’re rooting for you. We fully expect your startup to thrive. You will need to budget for the cost of running your business after it gets off the ground. These expenses are just some of the ongoing costs you’ll need to account for.
- Office supplies
A good rule of thumb when budgeting out the beginning years of your business is to factor in an additional 20% of your costs to cover expenses you didn’t think of. Taking the necessary precautions like those listed in this article could save your business from going under due to an unforeseen compliance issue.