The U.S. Bureau of Labor Statistics says that 20 percent of businesses close in the first year. Most of those businesses close because of cash flow issues.
They don’t anticipate the costs of starting a business and how long it takes to generate revenue. This is one of the most essential things about business finances to get right.
There are dire consequences if you get it wrong.
What is the business startup cost for your business? Read on to discover how much it costs to start a business.
Registration and Incorporation Fees
Before you do anything for your business, you need to make it legal. There are fees to register and start a business.
The costs depend on the type of business you have. You can register as a sole proprietor, which is the least expensive option.
You might need an attorney to help you register an LLC. That’s more expensive, but the paperwork will be filed correctly.
Professional Services
There’s a myth that new business owners buy into. They believe that they have to know every part of running a business and they have to do everything themselves.
That includes things beyond their expertise.
Smart business owners know that they need to surround themselves with people who can provide expertise and advice.
Get a business lawyer to look over contracts, an accountant for taxes, and a bookkeeper to manage your books.
You should have a plan in place in case things don’t work out. A company such as companydoctor.co.uk provides a Company Voluntary Arrangement isn’t necessary now but could be if you run into cash flow issues.
Location Costs
You’re going to need a place to work. Even if you work online, you might want to rent a co-working space.
If you have a retail space, you’ll have to pay rent and a deposit. You may have to pay for renovation costs.
Then there are permit costs and costs to get a certificate of occupancy. If you want a business sign, you’ll need to budget for that and permits to install it.
There are also utility costs. Electric, gas, water, and garbage are usually paid by tenants in commercial leases.
Your location needs an internet connection to operate. Be sure to budget for business internet and phone services.
If you have a new business account, it’s possible that you’ll have to pay an upfront deposit for services on top of monthly expenses.
Insurance Costs
About 40 percent of businesses don’t have insurance. Many more are underinsured. If you have to face a lawsuit or business closure without the right insurance policy, your business won’t survive.
Be sure to work with an insurance representative to go over every aspect of your business. You’ll get a comprehensive set of insurance policies that cover your risk.
The Business Startup Cost
How much does it cost to start a new business? It depends on your business.
This article gives you insights into some of the costs to start a new business that you don’t normally think about.
The business startup cost should include registration costs, professional fees, location costs, and insurance.
For more startup tips, check out the home page of this site.
