What Costs to Consider Before Starting Your Business

The first rule when starting a business is to precisely count the costs no matter what your business goal will be. If you are going to start an Etsy store from home or even a freelance writing career, some costs are universal. Another type of costs may be unique for a certain industry, product, or service. The list that follows includes some of the most common costs you should consider before starting your business.

Equipment and Technology

We live and work in a digital world, so you will need a phone, a computer, and if you ever need to take payments in person, some kind of credit card reader and card-processing service. Even though much of the business world operates without paper, you will need a printer and other devices.

You will also need things like a desk, chair, monitor, lighting, trash cans, furniture, and many other items so you can set up an office, keep inventory on hand, and generally do an everyday routine.

If you are starting in a home office, you may already have some of these things, but costs will still likely range somewhere from a low point of $1,000 dollars to near a six-figure, depends on the fact whether if you are starting a restaurant, a manufacturing business, a retail store or something else.

Incorporation Fees

These fees vary by state, but you will need to register your business name and your corporation. From an S-Corp to an LLC, there are a variety of ways to set things up, and some of the expenses you will incur will be for an attorney who specializes in business law in your state. You should also consult with an accountant to see which method has the best tax benefits for you.

Filing the incorporation papers is usually under $300. The cost of an attorney and consulting with an accountant will also vary but are generally not over $500.

Office Space

This is a big one, and even if you are setting up a home office, there will be expenses that go with that process. Essentially, you need space to work for you and your employees to work. Even the option of hiring remote workers can come with some costs, as you offer your employees incentives and bonuses to set up home workspaces, and you provide them with the software and perhaps even hardware they need to do the job.

If you rent office space, you should also factor utilities as part of the cost, including internet service if it is not a part of your lease package. These costs will average somewhere around $2 per square foot.


While a physical location for your office is important, just as important or perhaps even more so is your virtual location or your website. No matter what your business is, customers will find and contact you through the web, and much of your business will come to you from online referrals, social media, and other digital marketing.

The backbone of this is your website. This is the place where you communicate, it shows what you are all about, your business hours, what you charge, and it can even be one of the places people can order your products or subscribe to your services.

Website security is also a concern, and the more data you collect from your customers, the more you will need to secure it. Making payments online should not feel risky, and if does, you may be losing customers.

This is not an area to skimp on. Hire a professional web designer, preferably one who understands your business, and make sure your website is fast, secure, and mobile compliant. Your site will cost between $3,000 and $9,000 to set up, and around $200-$500 a month to maintain depending on if you take care of IT by yourself or rely on outsourced IT services. Costs may be higher or lower if you have a simple website or a more complex e-commerce site.

Marketing and Advertising

Once you have set up your website and office, that is just the beginning. For your business to make it, customers will need to discover you. This means that you need to advertise and engage in marketing. There are both physical and digital aspects of modern marketing, and you have to use both of them in order to succeed.

The physical type of marketing includes things like signage, business cards, print ads, posters, and flyers that you might use to let customers know about your business. It may even include things like newspaper, television, and radio ads.

Digital marketing costs will not only include ads but will also include things like SEO and link building, which are ongoing costs as well. You can pay for these services, create in house departments, or try to handle them on your own. Just remember that they cost time as well, and that is your most valuable asset.


You will need all kinds of insurance for your business, depending on what is your business preoccupation. The first type of insurance will be some kind of liability insurance, but you may also need property or renter’s insurance, workman’s compensation insurance if you have employees, and other types of business insurance.

This is something you should discuss with an insurance agent who is familiar with your business and industry. They will be able to advise you what you legally are required to have and what you might want to have for extra peace of mind.

It is okay to shop around. Just be sure that you are comparing policies with the same limits, deductibles, and coverage. Sometimes cut-rate insurance will offer you lower premiums, but with a less coverage overall, potentially costing you more in the long run.


Every business pays taxes, and you should count on this as part of your ongoing expenses. While you might not start making money right away, you will pay taxes on things like payroll and you may have to file sales tax reports.

You will also have to file income and expense reports to prove that you are not making a profit, otherwise, both your state tax commission and the IRS will expect you to pay the appropriate amounts.

This means you need a tax accountant, preferably one who handles the rest of your accounting needs as well. That way they are intimately familiar with your business. Your accountant should also know your industry really good. The cost will depend on how much money you make and how much work you expect from your accountant to do for your business.


These are the basic and most common expenses that every business will be facing. There will be other more unique costs associated with your business and industry. Research these cost and the ones above, and be sure you have adequate funding to cover those prices for an acceptable period of time. Consider these costs carefully, and how you will fund them, before starting your business.


Avery Phillips
Avery T. Phillips is a freelance human being with too much to say. She loves nature and examining human interactions with the world. Comment or tweet her @a_taylorian with any questions or suggestions.
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