You have something to offer the world. But, do you have enough money to start a business?
Before I get started listing expenses, I want to encourage you: it is possible for you to start your own business. Don’t give up.
Alright, let’s go through all of the costs. I’ll spend as much time as possible making this list exhaustive. And, feel free to get in touch with us if you have any questions about costs. We love seeing people’s business dream come true.
Government Fees – This is going to depend on how you register your business. The easiest is probably to register as an LLC (Limited Liability Company). Fees differ between states, but it’s usually between $50 and $500. The average filing fee for an LLC in the United States is $127 1.
Website – Costs for websites is two-fold. First, you must pay to have the site designed and made. I would recommend spending no less than $800 – $2000 on the site design. Also, you’ll have to pay to host the website. Cheaper hosts may work at first, but will cause major issues in the long run. Expect to spend $30 -$60 per month for good hosting.
Cost of Goods – This is obviously going to differ for every business. Make sure you figure out exactly how much it will cost to produce whatever product you’re selling. Not all businesses will have this expense.
Office Supplies – Expect to spend at least $100 on office supplies. This may include a printer, business cards, paper and pens, etc. Some business who are more office-oriented will have to spend more.
Taxes – If your business is a sole proprietorship, LLC, or partnership, you will not be directly taxed. But, every owner will be taxed individually when they file their yearly taxes. We recommend setting aside 15-20% of your profit in order to pay when it’s time.
Business Consulting – It’s difficult to start your own businesses, and most will end up hiring someone to help them get their business started and start getting customers. This is not necessary, but it is typically a wise investment. Expect to pay $500 – $2000 depending on what you need.
Advertising – You will want to pay for some type of advertising in order to let your market know that you exist. This is how you will start getting sales (aside from word-of-mouth). We recommend setting aside $500-$1000 for this as well, but you may be able to survive completely through word-of-mouth for the first year.
Payment Fees – People prefer to pay with debit/credit cards. A system that will allow your business to make these type of transactions takes some of the money. Be expecting to pay 2-4% as a processing fee. Also, purchasing checks for your company can cost around $50 at first.
Starting a Bank Account – You’ll need to start a business banking account. This doesn’t necessarily cost anything, but you’ll usually need to put $100 in the account to get it activated.
Possible Extra Costs
Equipment – This is going to differ for every business, and most will probably not need to purchase any equipment. Remember to calculate and expect this expense.
Insurance – Business insurance costs $500 – $3000 per year, but not all businesses need it. If your business is an LLC, you don’t need to purchase insurance.
Travel – You may need to travel for your business. If so, make sure to set aside enough money for a year. This could be gas, plane or bus tickets, car maintenance, etc.
An Office – If you’re not able to work from home, or if you need a place for customers to be able to come frequently, you’ll probably need to purchase an office. This is likely not necessary, especially when you’re just getting started. However, this can cost thousands of dollars up front.
You can spend as little as $2,500 to start your business.
This is a relatively small investment compared to the profit you will receive if you market your business well. It’s worth it. And completely doable.
If you can spend more, that’ll accelerate the rate of growth of your business. With $4o00, you could be running a well-oiled, sales-generating machine while doing exactly what you have dreamed of.
But, I still haven’t even told you the biggest expense. And it’s not money.
The Biggest Expense
The biggest expense has nothing to do with money. It’s your time. Starting a business is a comittment to spending a lot of time getting it running and making customers happy.
Make sure you have many hours put aside every week specifically for your business. You’ll risk burning out, but it’s worth it in the end.
If you need help with any of this, feel free to contact me. I’d love to walk you through some of this stuff. And I’m not going to charge you for anything (it frustrates me that people still assume I’m after their money). Get in touch by clicking here. I want to help you succeed, and I hope this article was helpful as well.