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The Top 5 Hidden Costs of Starting a Business
Starting a new business can be exciting for entrepreneurs, but developing an accurate budget can be daunting. A good rule of thumb is to calculate your first-year budget in your business plan and add an additional 20% for unexpected expenses.
Be sure to factor in these five oft-forgotten start-up costs into your budget:
1. Licensing Fees
Business licensing fees can be affected by federal industry regulations and local policies. The physical location of your business and the number of jurisdictions you operate in also impact licensing fees. For example, a mortgage company could pay different fees based on the city, county, or state it operates in. If it plans to operate nationwide, it must obtain licenses for all 50 states.
2. Surety Bonds
Government agencies require surety bonds in various industries to prevent unqualified professionals from entering the market. New business owners may not realize they need a surety bond until the licensing process. The cost of the bond can range from $100 to $20,000, depending on coverage and credit scores. Financing options are available for those unable to pay the full premium upfront.
3. Professional Fees
Finding the right professional help is crucial for new and seasoned business owners. Hiring an accountant to manage finances and taxes is advisable, as is finding a lawyer with industry experience. Although professional fees can be unexpected costs, they save time, money, and headaches in the long run.
4. Technology Costs
Every business requires upfront technology costs. Consider the technology needed to manage your business efficiently, such as computers for employee correspondence, cell phones for tracking traveling employees, and custom data entry software for quick order processing. These conveniences come at a price and should be factored in when hiring new employees.
5. Utilities
Paying for utilities can be significant, especially for large-scale operations with multiple employees. Large facilities consume more lighting, heating, and air conditioning, incurring higher costs, particularly in extreme weather zones.
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I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
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