Unexpected Business Setup Costs
Starting up your own business is a challenging yet exciting venture. If you’re in the process of setting up your own company it’s likely that you’ll have a solid plan in place and will have accounted for all of the necessary costs you think you’ll come across. But what about the not-so-obvious costs that come with setting up a new business?
In this guide we talk you through how you can prepare for some of the most unexpected costs you’ll face when starting up your own business.
1. Software and tools
One of the most frequently forgotten costs of setting up a business is making sure you’ve accounted for all of the resources you’ll need to use. Most people tend to remember equipment (PCs, monitors, laptops, desks, chairs, etc) but one element that’s often overlooked is software and resources your business requires, which often doesn’t come cheap. Depending on the kind of service or product your business will provide, your software and tools can take up a pretty sizeable chunk of your finances, so they’re definitely something worth budgeting for.
One of the most important costs to plan for when starting up your own business is insurance. Whether it’s office insurance, public liability cover, indemnity insurance or even things you may not have considered such as business car insurance. It’s vital that you know exactly what kind of insurance you need when setting up your own business. Insurance can be pricey, but making sure you’re fully prepared in case of accidents, thefts, damages or mistakes is always worthwhile.
3. Deposits on office space
So you’ve done your budget, you know exactly how much rent you’ll be paying each month and what your overhead costs will come to. But are you sure you’ve factored everything in? What about the cost of the deposit on your office space? Depending on the length of your contract this can often be anywhere between 3 and 6 months’ rent, which can really set you back financially so is definitely worth factoring into your budget.
4. Business rates
If you’ve come from a career where you were an employee, luckily for you it’s likely that you won’t have had to have too many dealings with business rates. But now, as a self-employed business owner, you’ll become entirely responsible for ensuring that you pay the correct amount of tax. Business rates might not apply to your company, depending on the type of business you’re setting up, but it’s important that you find out what kind of tax you should be paying and whether or not you’re eligible for exemptions. The government website is the best way to make sure you’re up to date with everything you need to know.
5. Licenses and Permits
Depending on the industry you’re in, there may be a range of necessary licenses or permits you’ll need to acquire when setting up your business. For instance, if you’ll be selling alcohol it’s likely that you’ll have to apply for a premises license which can cost up to nearly £2,000. Other licenses and permits you may need to consider include sign permits (if you want to put signage up outside your establishment), company incorporation (if you choose to set up a limited company) and more. So it’s definitely worth assessing the types of permissions you’ll need and how much they’ll cost before starting up your own business.
6. Credit card terminals
If you’re planning on taking card payments when you setup your business, you’ll need to either buy or rent a card payment machine of some kind. If you buy a card machine it’s likely that this will cost anywhere between £80 and £300, not to mention the payment processing fees and transaction fees that will need to be paid on an ongoing basis. Being aware of these kinds of costs and doing your research before finalising your budget is extremely wise, and can avoid any nasty surprises later down the line.
7. Invoicing and accounting software
Making sure you have a good accounting system in place is really important for any small business and will be guaranteed to make life a lot easier in the long run. Software such as Xero and Quickbooks allow you to keep accurate records of your ingoings and outgoings, track your business’ performance and manage important files such as your VAT returns, invoices and business expenses.
8. Accountant and bookkeeping costs
Even with the best accounting software out there, you’ll still need to dedicate a significant amount of your time to keeping your business’ financial accounts in order. However, in the early days of starting up your business you may come to the realisation that your time and effort would be better spent elsewhere and that it might be worth getting an accountant or bookkeeper to help you keep track of things. This is extremely common in new business startups, so it’s always a good idea to make sure you’ve got the funds in advance, just in case.
9. IT support, products and services
One major expense that’s often overlooked by new business startups is the costs of IT support and services. A lot of prospective startup businesses will have factored the price of a website into their budgets. However, there are many added costs involved in getting your business online that can be unexpected to many small business startups. Before agreeing on a budget for a website, make sure you’ve considered all of the following:
- Do I have an SSL certificate for the website?
- How much web hosting space do I need?
- Will I be able to create multiple email addresses within the company?
- Have I got the right domain name?
There are so many questions you need to ask yourself (and often your web developer or designer) when starting up a website for your business. So becoming aware of all of these factors early on in the process should stand you in good stead for when you launch your business.
It’ll be worth it
Unexpected business startup costs can be both financially and mentally challenging, and it can sometimes feel like it’s one thing after another. But the key here is to prepare. As long as you know what to expect in advance you should have no nasty surprises when it comes setting up your own business.
Whatever kind of business you’re setting up, it’s always worth getting help from a professional who may be able to shed some light on areas you’ve not considered. Another tip is to keep in the loop with business laws and regulations to make sure you don’t get caught out and always have some emergency funds put to one side, just in case.
Either way – we wish you the best of luck starting up your own business!