So, you’ve taken the plunge and decided that the be-your-own-boss lifestyle is the one for you. Congrats! But is your bank account ready for business startup costs?

While you may be able to build some businesses overnight with a $26-a-month website, don’t overlook the other startup costs associated with getting a business off the ground. A good rule of thumb is to create a budget for how much money and time it will take to get started — and then double it.

Nearly 550,000 new businesses launch each month. Many of those will fail. Of course, the odds of success depend on a lot of things, like the market demand for the goods or services you’re offering, how hard you work and how good you are at reaching your customers.

But financial savviness also plays a big role. Taking the time to make sure you have the necessary funds to cover your startup costs — including these six expenses that are easy to overlook — may increase your chances for success.

If you need a team, you’ve probably already budgeted for each employee’s salary. But don’t forget about benefits packages, which are essential to attracting and retaining employees.


    Your startup may not bring money in for one or two years. It sounds scary, but it’s normal. Even during that dry spell, however, you’ll need to keep up with your usual living expenses. Start budgeting by listing bills you’re on the hook for every month, such as car payments, your rent or mortgage, and utility bills, and then add in how much you spend on varying expenses like groceries and eating out. Somewhere in between what you normally spend and what you absolutely need to make ends meet is a good number to budget for.


    A phone and an internet connection may be all you need to officially be in business, or your business may require a physical footprint. Either way, factor in office space, signage, desks, phones, utilities and any necessary software that’s essential to doing the job. And make sure you’ve gotten necessary permits, which are usually required if you’re selling things like firearms or alcohol. The good news is you’ll be able to deduct some of these costs when it comes time to pay your taxes.


    Is your startup a one-man show? Or will you hire employees right away? If you need a team, you’ve probably already budgeted for each employee’s salary. But don’t forget about benefits packages, which are essential to attracting and retaining employees. A baseline package normally includes health insurance and a retirement plan. And don’t forget to include yourself! You may also want to consider disability and life insurance in order to protect you and your family.

  4. TAXES

    If you’re coming from a traditional job, your employer automatically deducted taxes from your paycheck. That’s not the case when you’re self-employed. Now, it’s up to you to set aside money for taxes and pay them on time — lucky you! To rub salt in the wound, you’ll likely pay more in taxes than you did in your previous job because you no longer have an employer contributing. In addition to paying income tax, you’ll need to pay the self-employment tax, which in 2017 was 6.2 percent of your first $127,200 in income for Social Security and 1.45 percent of total income for Medicare. You’ll also have to pay that for any employees.


    Business insurance helps protect your investment if anything were to unexpectedly happen to you or one of your employees. There are many types of insurance policies for businesses, and the type of insurance required varies from state to state, though most require you cover insurance for workers' compensation.


    When you’re first starting out, you may decide to offer samples and coupons to get your business’s name out there. That means you’re giving things away for free. It may be what you need to build buzz and get customers in the door, but you need to make sure you can foot the bill.

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