Four Hidden Costs to Starting a Business

When starting up a new business, you’ll need to set a realistic budget that accounts for as many expenses as possible. A number of different hidden costs, such as legal fees, can bust your budget before you know what’s hit you. If you don’t plan for these oft forgotten start-up costs, your financial affairs can get messy fast. As such, this article will explore some hidden expenses that entrepreneurs often overlook when setting up budgets.

License and registration fees

The license and registration fees you’ll be expected to pay will vary depending on the county, city and state in which you plan to operate your start-up. The type of business you’re going to run will also affect how much you’ll have to pay to maintain the proper documents. Federal industry regulations and local policies can affect your start-up costs in different ways. When planning to start a new business, thoroughly review license and registration expectations at the city, state and federal levels. You’ll then be able to use this knowledge to accurately budget for all of the permits and licenses you’ll need.

Surety bonds

Government agencies require most business owners to purchase surety bond insurance before they can get a business license. Government agencies use surety bonds to ensure that business owners do their jobs according to industry regulations. Bonds also reassure customers that they are working with a reliable company.Unfortunately, many new businesses overlook surety bond costs until they find out they have to purchase one.

Depending on the type of bond you need, surety bond premiums can range anywhere from $100 to thousands of dollars each year. Similar to licensing, your business location will influence the bond rate. For example, when purchasing a surety bond in Illinois, you’ll likely pay a different premium than when purchasing one in California. The owner’s personal financial credentials will also impact your surety bond rate. As a general rule, the stronger the application, the lower the rate.

Technology

No matter what industry your business falls under, you’ll most likely need to budget for some technology costs. Entrepreneurs often don’t realize the costs associated with these basic technological services as they’re so often taken for granted. The type of equipment you need for your start-up will vary depending on your specific needs.

At the very least, you’ll probably need a computer or two with online access that allows you to connect with customers. Some other needs might include company cell phones, data entry software and other miscellaneous devices. Although these tools can help you manage your business more efficiently, they often come with a steep price. Not to mention the fact that upkeep can cost more than you might expect, so be prepared when planning your initial budget.

Utilities

Lighting, heating, cooling and water bills can pile up quickly, especially for start-ups that require large facilities. These costs can be even greater for enterprises that operate in harsh weather climates.

Although you need to plan for these expenses when first opening your new business, you’ll also need to be prepared to have funding set aside for these costs on a yearly basis. To minimize financial setbacks, not to mention legal trouble, be sure to keep up with these costs and pay all bills on time. Doing so will save you time, money and headaches later on.

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