There are lots of costs to factor in when starting a business. While some are more obvious such as equipment and marketing, other costs can be less obvious and can sometimes get overlooked. Here are just some of the hidden costs of starting a business and expenses to be wary of.
Permits and licenses
You may need to apply for certain permits and licenses when setting up your business. This depends very much on the type of business. For instance, when opening up a bar, there may be numerous licenses to consider such as an alcohol license, food license, music license and possibly a license to show TV. Permits meanwhile may be needed for renovations. Always research into these licenses and permits to avoid fines.
Insurance
Most businesses need some form of insurance to operate. If you’re hiring employees, you’ll need to have employer’s liability insurance. Meanwhile, if you have business vehicles you may have to consider schemes like road risk insurance. Other insurance schemes such as public liability and property insurance are recommended for many businesses, but not compulsory. You may be able to save money on insurance by looking into insurance bundles.
Employee benefits
If you’re hiring employees, you’ll need to consider costs beyond their wages. Employees are also entitled to sick pay, holiday pay and a pension. You may also want to consider other benefits such as bonuses, free lunches and possibly even perks like health insurance or a work phone (if you’re feeling generous).
Recruitment
When initially recruiting employees, there may also be costs to consider. This could include the cost of creating ads or the cost of using a recruitment agency. The more employees you need to hire, the more you’ll spend on recruitment (which is a good reason to try and keep employee turnover low).
Utilities
When running business premises, a cost that can often get overlooked is utility costs. Running lots of machinery – whether it’s computers or industrial machinery – could require a lot of electricity, which could mean high energy costs. There are lots of eco-friendly ways to run a business that can save you money on energy bills.
Bookkeeping
You’ll need to keep financial records and make sure that tax is paid annually. This could require outsourcing an accountant or downloading accountancy software. Either way, expect to pay some money towards bookkeeping costs. Using accounting software is generally cheaper than hiring an accountant, but some benefits may benefit more from an accountant.
Loan interest
Many businesses will end up borrowing money at some point. If you do take out a loan, you’ll usually have to pay interest fees on top. Be careful of letting interest fees pile up. By shopping around for loan options, you can find a loan with the cheapest interest rates.
