The Unexpected Costs When Starting a Business

Just about all businesses will incur expenses, even simple one person enterprises run from home; many people starting businesses both large and small underestimate or aren’t aware of some of the costs involved. 

These hidden costs can seriously mount and, if not taken account of, can skew budgets, revenue forecasts and cashflow. Here are some to be aware of:


A significant hidden expense both for owners and staff; reducing the time certain tasks take can reduce overheads and boost productivity. For example, using inventory software to manage order fulfillmentand tracking can improve efficiency and slash the time manual order processing can take. 

Time spent on routine tasks that could be automated or outsourced can instead be used to undertake more income-producing activities. 


If you’re considering hiring a premises as opposed to working from home, think about the related costs of workspaces.

There’s utilities bills to consider; one way of making savings is to look into using a shared workspace, or hire space in a business startup center. Often these charge one all-in price to include utilities so enabling you to budget accurately.

Licenses and permits

It’s easy to overlook all the licenses and permits you may need at start up; a situation not helped by individual states often having different stipulations and rules.

Even if you’re making minor alterations to your workspace you may need permissions and permits. For example, in Houston, zoning permits are required for minor constructions such as fences over eight feet.

License renewal fees can sometimes be underestimated or simply forgotten about. The Small Business Association (SBA) has more licensing details.

Subscriptions and industry-related memberships

You may need to join a trade body or subscribe to industry and related services to gather information relating to your field. It’s easy for these to add up to a significant sum.

Staffing costs

Along with salaries and overheads to cover their workspace, whether part of an office area or production floor, there are other associated coststhat can add considerably to staffing expenses:

  • Sundries– extra office furniture, janitorial supplies for restrooms, water cooler, refrigerator, maybe beverage supplies and more to provide workplace facilities 
  • Office consumables– along with the obvious such as printer consumables are odds and ends such as staplers, sticky notes, pens, pencils and more
  • Employee taxes and insurances– you’ll need to ensure a safe workplace so part of that is liability insurance; you’ll be paying half of your employee’s FICA (Federal Insurance Contributions Act) tax to include their Social Security and Medicare
  • Benefits– added perks such as a healthcare plan will add up

As an example, it’s been calculated overall staffing costs can translate to an employee on a salary of $50,000 per year actually costing their employer $70,000.

Don’t forget recruiting; the costs to replace and add to your staff are estimated at around one fifth of the post’s salary.


No matter how careful you are, if you supply a product it’s likely some will be lost for the following reasons:

  • Theft– even the occasional item lost in the mail adds up
  • Under supply– you may not receive all you ordered
  • Staff errors– too many picked and dispatched compared to what was ordered and paid for (one area where modern inventory management systems as mentioned above will help)

Fortune magazine say shrinkage can cost US retailers some $32 billion per year overall.

Fees for specialists and professionals

Even a small piece of work undertaken by a lawyer will soon add up based on their hourly rates, so take this into account even if you don’t use them regularly. You may need help from other professionals such as IT consultants and accountants.

And finally…taxes

Apart from income tax there are other taxesapplicable to some businesses such as sales tax, property tax, employment taxes (discussed in ‘staffing costs’ earlier) and more. These need to be budgeted for.

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