So, you’re planning to open your own business soon and you’re in the process of creating your budget. You think you’ve covered everything, but you’re starting to worry that you’re missing something important.
You know that the hidden costs of running a business are often the thing that tanks new businesses before they can even get off the ground. You’re trying to make sure that your business isn’t one of the 20% of businesses that fail in their first year.
If you’re feeling a bit overwhelmed by it all, we can help!
In this article, we’ll break down 6 hidden costs of running a business. We’ll also tell you what to look out for, and what not to forget, so you can make sure you’re set up for success.
Now then, let’s get started!
1. Permits and Licenses
If you’re thinking about starting your own business, one expense you may be forgetting about is the cost of various permits and licenses. Because regardless of what kind of business you own, odds are there are a handful of permits and licenses you’ll need to pay for each year in order to operate legally.
Those costs, of course, can add up very quickly, sometimes reaching tens of thousands of dollars, depending on the business. So, if you don’t yet know about what kinds of permits and licenses you need in order to avoid expensive fines, do some research before you open your business.
2. Various Types of Taxes
Let’s be honest, nobody wants to pay taxes. And while some businesses are taxed harder than others, it’s oftentimes new and small business owners who struggle paying them the most.
You already know to expect to pay income taxes, which can add up in a hurry. But if you plan to hire employees, you’ll also have to pay employment taxes too, which for some businesses can cost just as much as income taxes each year.
3. Office Space
If you can’t run your business out of your home, you already know to expect to pay money each month on rent or a mortgage. What you might not know, however, is the other costs of owning an office building that can present themselves.
For example, you have to have a special type of liability insurance before you can legally allow customers into your office. You also often need to maintain your space, which can be more costly than home maintenance if your office space is large.
Keeping it clean is another thing that can cost money, as odds are you’ll need to invest in a cleaning service. And even if you handle it in-house, that’s time you have to pay your staff for working, which of course adds up over time.
4. Equipment Costs
Continue with the assumption that you’re starting your business from scratch, you’re going to need to acquire all of the equipment that you need to operate beforehand.
This is most likely something you’ve already thought about, but maybe you haven’t thought about other costs that come with owning that equipment.
For example, things break, especially if they’re used often. And if you’re buying used equipment, you can expect to spend some money on repairs before your first year of operation is up.
Also, lots of equipment takes a great deal of power to run. That means your power bill at the office could be quite expensive, surprising you the first few months if you’re not prepared for it.
5. Employee Benefits
In order to acquire good employees, you have to provide employee benefits. Because while a good salary is nice, people are going to go someplace that they can get basic things like insurance if given the chance.
Of course, these things cost money, which means you need to have them in your budget if you want good to hire a strong staff. And even if you manage to get people on board without benefits, they’ll most likely leave as soon as they find a job that does offer them, which is worth noting.
6. Credit Card Fees
It’s an absolute given that you’re going to accept credit cards, right?
Well, did you know that processing credit cards actually come with a fee for you, which affects how much money you make each purchase?
The good news is, this can be counterbalanced by simply including credit card fees in the price of your goods and services. But if you don’t know about it, and you don’t plan for it, you can be caught by surprise, which isn’t what you want.
Still not sure how various credit card fees work? You can learn more here!
Be Aware of the Hidden Costs of Running a Business Before Opening
Well, there you have it! Those are 6 hidden costs of running a business!
So, if you plan on opening your own business soon, and you’re working on a budget, be sure to keep these things in mind so you can avoid any unwanted surprises.
Remember, you need to make sure your business has all mandatory licenses, permits, and insurance before opening. Failure to do so can lead to tons of fines, which often forces you to spend more money than you would have had you followed the rules in the first place.
If you want to have a staff, make sure you plan for all costs that come with doing so. The same thing can be said for a building or office space, as there are tons of hidden costs that come with working from outside of your home.
Last but not least, make sure you plan for the costs to maintain and operate your equipment. Because simply buying the equipment isn’t the only thing you can expect to pay for in your first year.
Looking for more business strategies and other useful tips? Check out our blog!