Typical Costs of a Small Business
Whether you are starting a new business or operating an existing business, you will be keenly aware of the costs that you face.
Many of your startup costs will be one-time expenses. They will help you determine the amount of money needed to open for business on Day 1.
Here are some examples:
- Space-related Expenses: office furniture and equipment.
- Production Expenses: manufacturing equipment and materials inventory.
- Marketing and Sales Expenses: point of sale software and equipment, market research, printed marketing materials, and website design.
- Technology and Communications Expenses: phones, computer equipment, and accounting software.
- Incorporation and Licensing Expenses: business registration fee, permits, and licenses.
- Professional Services Expenses: legal and business insurance.
Once your business is up and running, you will have these typical ongoing expenses:
- Space-related Expenses: rent and utilities.
- Production Expenses: raw materials inventory, manufacturing equipment maintenance, and shipping.
- Marketing and Sales Expenses: advertising.
- Technology and Communications Expenses: website hosting, internet service, and phone service.
- Payroll Expenses: wages, outside payroll service fees, and legally-required benefits (Social Security, Unemployment Insurance, and Workers’ Compensation).
- Professional Services and Insurance Expenses: financial accountant, tax accountant, and business insurance.
- Other Operating Expenses: repairs, maintenance, travel, income taxes, etc.
Accurate estimates of startup and ongoing expenses are crucial to making accurate projections of your cash flow and profitability, whether when starting up or preparing an annual budget. If done well, you will have an advantage and fewer surprises!