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15 Costs To Consider When Starting Your Own Business
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If you contemplating starting your own business, there are a number of costs you must factor into the essential expenses of starting the business. There are also other costs which must be included in the business operations plans, allowing you to establish a realistic working model to anchor your business in reality and stage your company for success.
The costs involved in establishing a business are known as start-up costs. These can include items which fall into the several categories, such as asset acquisition, legal and registration fees, professional service fees, marketing expenses, and personnel-related costs.
Operational expenses that are essential to include in your considerations are those costs that will remain a part of the business expenses even after the initial establishment of the company. These costs must be included in your business planning initiatives, as you will want to know your operational budget prior to starting the business.
Operational expenses can include monthly costs for rent, travel, and employee pay. They can also include taxes and benefits, the scheduled purchase of new equipment and supplies, inventory costs, and production expenses. Expenses associated with marketing, advertising and sales should also be examined prior to starting your business.
After opening your business, there will always be the need to refine your accounting and budgeting practices but the initial consideration of all potential start-up and operational costs is essential to framing your business for success. With proper thought and planning, you can establish your business and move ahead into your chosen industry, confident that you've anticipated the essential elements that will allow you to succeed in your new venture.
Asset acquisition includes the purchase of buildings, computers, office furniture, production equipment, business vehicles, and any other necessary fixed items that are needed for the business. Some of these items may be needed at the start of the business, while others may be purchased later on down the road. You should try to anticipate those that are essential to beginning business operations and factor those into your start up costs. Later items needed can be worked into annual budget plans.
Legal and Registration Fees
Fees associated with the registration of your business name or the establishment of a business identity should be included in your start-up cost projections. Legal fees for incorporation of the business may be required as well, unless you are considering a sole proprietorship.
Professional Service Fees
You should consider the various professional services you may require in starting your business. Accounting fees are big items for consideration. These may include the hiring of an accounting firm or individual accountant. They can also include the purchase of any necessary invoicing, recordkeeping, or bookkeeping software associated with your specific business type.
Professional fees can also include the hiring of a marketing firm or professional. A marketing plan for advertising the launch of the business is essential. This may include print advertising in the form of ads, brochure, fliers, and business cards. It can also include non-print advertising like commercials, websites, radio spots, and other internet marketing initiatives.
Personnel Related Expenses
Those costs associated with the hiring of employees must be considered at the start of any new business. You may not have many employees, or perhaps you are a sole proprietor. Regardless of the size of the business staff, you will have expenses that must be considered.
If you are planning a business that will be incorporated, you will have payroll expenses to consider. These will include all wages and salaries, in addition to payroll taxes. If you are a sole proprietor, you will still need to consider expenses associated with paying yourself or setting aside self-employment tax payments.
The expenses associated with monthly and annual operations should be taken into consideration when planning a new business venture. There may be expenses associated with renting equipment or space essential to business operations. There may also be business travel expenses to consider, dependent upon the type of business you're planning.
Employee Pay, Benefits, Payroll Taxes, and Sales Tax
Monthly, quarterly and annual costs associated with employee pay, benefits, sales taxes, and payroll taxes should also be included in your plan scope. Regardless of the type or size of the business you're planning, at least some of these expenses will come into play.
Supplies, Inventory, Equipment, Maintenance, and Production Expenses
You must also consider the costs of supplies and inventory, future equipment purchases, maintenance, and production. Again, dependent upon the type and scale of the business, these costs can be a significant part of your operational expenditures.
Sales and Marketing Expenses
Ongoing sales and marketing expenses must also be factored into your long-term plans. The initial expenses associated with advertising and promoting the launch of a new business are only the beginning of the sales and marketing expenses you will face. You must include long-term advertising, marketing, and sales expenses in your plans in order to stage your business for success.
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