Starting a business can be expensive and unless you account for every conceivable cost, you could still be left paying out of pocket. Most business professionals and financial advisors say that if a start-up is not careful about some of its initial expenses, it could actually run the risk of failing. Moreover, the first year of a start up is the most crucial and you want to pad your budget in case of every possible scenario. The last thing any start-up wants is to have an unexpected bill that can potentially put a huge dent into your vital cash flow. However, knowing what these costs are is important when you are budgeting for your start-up. For instance, when you apply for a loan or ask an investor for a specific amount of capital, it is critical that you take an account of some these costs. Here are 5 commonly overlooked start-up costs.
- As a start-up company you will be faced with having to sign a lot of contracts. These contracts can be with banks, investors, employees, executives and so on. You will also need to have a lot of contracts signed, so that you can better protect your new business. One of the biggest over looked start-up costs is legal council. Every start-up needs a lawyer to help draft contracts so that your business is fully protected. You might also need an attorney for other legal matters as well. For instance, when a client doesn’t pay or you need someone to negotiate a loan.
- When you are looking for a reputable lawyer, it might be wise to search for an accountant as well. In the first few months your start-up will be incurring the most costs. You want to hire a good accountant, because they will be able to keep better records of your cash flow, accounts payable, accounts receivables and your daily expenses. This is important, because an account will be your closest ally when tax time comes around. The last thing you want, on top of all your other expenses, is a big tax bill.
- Start-ups also have to take into account the different types of insurance your employees need. Certain cities, states and counties have different guidelines based on the number of employee, but you are usually required to provide at least disability insurance. You might also have to provide health, dental and life insurance.
- Another commonly overlooked start-up cost is office equipment, like phone systems, Internet, and computers. These costs can really add up, especially if you need a lot of bandwidth or you need a complicated phone system. If you look at Grasshopper reviews, you can see that this unique company can set up a professional, virtual phone system for very little money.
- Lastly, one of the biggest commonly overlooked start-up costs is Internet domains, website hosting and trademarks. If you have a lot of domains and cross-domains, as well as trademarks to protect your business name, is can possibly run you thousands of dollars, depending on the size of your business. Make sure you take into account these costs when applying for a loan or talking to investors.