What are the Costs Commonly Associated with Starting a Business?

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When starting a business, you’re likely to run into costs. Everything costs money, so you have to be prepared to spend money in order to make money.

So, what are some of the costs you are likely to run into?

First of All, Know Your Business Model

Before you start trying to figure out what starting a business will cost, you need to acknowledge the reality of your business model. I have a freelancing business. My costs are pretty low. I have a computer and access to the internet. That’s it. And chances are that I would have bought those items anyway.

Realize that not all the potential costs of starting a business are going to apply to your business. Depending on where you set up shop, and what you are trying to accomplish, the costs are going to be variable. But here are some of the things you can expect:

Office Space

If you can work from home, you can avoid the cost of office space. However, if you have a business that requires a brick and mortar storefront, or you plan to meet people on a regular basis, you might need to pay for office space. You can do this through purchase or by renting, or even start out by coworking.


When you make something, one of the costs of starting a business is the supplies you buy. Figure out how much you need to purchase to get a solid start. The more you need, the bigger your costs. Try to produce on demand at first, and then ramp up production as you earn more money.


My friends with graphic design businesses need special software to succeed. Pay attention to the equipment you need. You might need to buy office equipment or other equipment to accomplish your business goals. List the equipment and look for ways to get it at a discount until you can upgrade.

Licenses, Permits, and Legal Fees

When I formed my LLC, I paid a CPA to help me out. I have a legal team that consists of my brother, sister-in-law, cousin, and uncle. You might have to pay other fees for these types of services, however. On top of that, depending on state and local laws, you might need licenses and permits as you get involved with starting a business. Pay attention to the requirements so you don’t end up in trouble. And don’t forget about business insurance.

Operating Expenses

These are all the costs of starting a business that involve keeping it running. It might include:

  • Utility costs
  • Marketing
  • Payroll
  • Insurance
  • Taxes
  • Benefits for employees
  • Travel
  • Website development and maintenance

You might have other costs related to running your business as well. You might be surprised at how much it can cost to run a business, especially as it grows and you need to hire more people.

Association Memberships

Finally, it might make sense to pay for association memberships. If it can give you access to resources and potential clients, joining a trade organization can make sense. Additionally, you might need to pay to attend conferences and trade shows or pay for important industry magazines.

Figure out which items make the most sense for your business. As you put together your cost estimates for starting a business, you’ll be able to better prepare for what’s next.