Who doesn’t want to be an entrepreneur? I’m sure everyone does. Well, becoming your own boss is not so easy. Before starting your own business, you must pay attention to things like - the business plan, the market analysis, the budget, and so on. ‘Money’ is the primary element to start a business. So, try to be economical and avoid wastage of money. To create a perfect budget for business is a tough job. Also, other costs that often go unnoticed.
Find out the hidden costs of starting a business:
1. Licensing or permit fees
Most of you must be aware of the licensing fees that you need to get before running a business. What you may not know is the amount of money you need to pay.
How much permit fees you have to pay depends on several factors like - federal industry regulations or other governmental policies that are relevant to your profession, the physical location of your firm and the area of the jurisdiction where the business is set up.
For instance, if you start a mortgage company, then the licensing fees would vary based on which city, county or state you want to do business. You’ll also have to pay permit fees if you choose to operate an online company.
2. Industry association fees
At the beginning, when your business is small, the industry association keeps you connected. You can stay connected by joining a trade association that is specific to your business. But remember, the membership of these associations can be expensive. So, be careful while choosing one.
3. Professional or legal fees
You need to hire an accountant or a lawyer to make your business run smoothly. These too require money. No one would work for free, right?
Hiring a lawyer can cost you about $125 to $500 per hour.
So, it’s better to negotiate the fees beforehand to avoid further hassles. You must be clear about the fees with all known possible costs. Initially, finding professionals for your business could result in some unexpected costs, but it would save both your time and money in the long run.
4. Technology costs
Irrespective of the line of business you are in, you need to pay at least a decent amount of technology cost. To set up a business, you would require your own website, computers, cell phones, printers, scanners, fax machines, data entry software, and so on. Unfortunately, all these don’t come without a price tag. Once your business starts growing, these costs would also increase. You need to prepare for the maintenance costs as well.
5. Utility costs
If you are planning to set up a large scale business with multiple employees, you can’t ignore the cost of utilities. You need to keep money separately for buying desks, chairs, file cabinets, paper towels, toilet tissue, soap, plates, cups, refrigerator, lights, heaters and air conditioners. You also need money for paying electricity, water, the internet, phone bills, and so on. Office supplies like staplers, pens, paper clips, notepads, highlighters, etc. might seem little costs, but these can add up to something big eventually.
6. Surety bonds
Surety bonds are beneficial in keeping away unqualified professionals from acquiring certain markets and stopping unethical business practices. These are important for all types of business, especially to those concerned with consumer services. As business owners, you have to pay the premium costs for these bonds, which could range anywhere from $100 to $20,000.
How much amount you need to pay depends on how much bond coverage a business requires and the owner’s credit score.
Luckily, many surety bond providers that’ll finance your business if you’re unable to pay the entire premium fees.
7. Business insurance premiums
What will you do if a fire takes out your office? You’ll be financially devastated. So, getting a business insurance for your company is a smart move. It would cover your business in case of any danger. Before choosing a business insurance plan, you must consult an insurance expert as there are various types of business insurance policies.
According to Rob Marsh, a Salt Lake City resident who started his business, Logomaker.com, in 2010,“because my business runs online, I also had to secure insurance to protect against data breaches and online security issues.”
Taxes can be daunting if money isn’t rolling in your business. But, you have to pay Uncle Sam something, which is disturbing if you don’t bring enough money. You must be prepared ahead of time to handle these known unpleasant surprises. So, try to plan your business strategies in a way that’ll give enough output to cover these costs.
As you can see, starting a business is not only about a business plan, there are more to it. So, before setting up a business, you should take into consideration the other factors as well, especially the financial elements.
Do you know any other hidden costs that entrepreneurs should watch out? If so, then leave a comment in the box below.