Kiely spent hundreds of hours researching, analyzing and writing about the best marketing services for small businesses, including email marketing and text message marketing software. Additionally, Kiely writes on topics that help small business owners and entrepreneurs boost their social media engagement on platforms like Facebook, Twitter and Instagram. Because every business is different, your exact startup costs will depend on your business’s needs and specifications. For example, a brick-and-mortar store will likely have higher startup costs than an online business, and a coffee shop requires different equipment and furniture than a bookstore. Startup costs are expenses incurred in the process of starting a new business, and they should be outlined in detail in your business plan.

  • It’s up to you to adjust accordingly based on actual results over time.
  • Miscellaneous— This is the catch-all for the cash needs that will not fit in other categories.
  • Download this free worksheet to help you calculate your startup costs.
  • Research, organization, and planning skills are essential to running a successful business.
  • Having even a rough estimate can help you avoid unnecessary risks and stay on track during more volatile months.

Then, look at how much your ongoing will cost for one month and multiply that figure by several months to calculate your initial total startup amount. That depends on when you realistically expect to see revenue or additional funding. Get as close as you can to the real cost of each item on your list. Your research should include comparing different vendors to help you minimize expenses without sacrificing quality. Depending on your business, research can include equipment leases, rent, office supplies and contractor salaries. Typical small-business startup expenses include research, licensing fees, payroll, insurance and rent.

Insights from SVB Industry Experts

Rent and payroll expenses before launch are considered startup expenses. The same expenses after launch are considered operating or ongoing expenses. And many companies also incur some payroll expenses before launch — because they need to hire people to train before launch, develop their website, stock shelves, and so forth. LivePlan suggests a different and probably more intuitive way to estimate startup costs. The key difference between LivePlan and traditional methods is the estimates start when a business starts spending rather than when it launches and starts getting revenues. There is no division between the launch date and pre-launch spending.

When you’re deciding which licenses and permits you need, factor in the initial costs and the fixed renewal fees as well. For small businesses without thousands to spend on marketing, social media and digital strategies can be very valuable. They offer a good balance between affordability and reach of potential customers—promoted ads costing no more than a few hundred dollars. Contact Lendio to learn the various types of financing options they have available to fund startup businesses. The least expensive organization structure is a sole proprietorship since you’ll likely only need to file a business name with the local court clerk.

Best Startups You Need to Watch Out for…

However, there are a few Business Startup Costs: It’s within the Detailss of expenses that are common for most types of businesses. However, large purchases are not deducted all at once on returns. Many expenses are amortized – meaning the deduction is spread out over time, usually around 15 years. As an example, if you buy new office equipment, you can list pieces as a tax deduction but must claim depreciated cost.


For example, you’ll need to file specific paperwork with your city or secretary of state when forming an LLC or incorporation, along with a one-time or annual fee. LLC filing costs vary by state and range from $40 to $500, with an average of $132. Incorporation fees are similarly priced, though some states might charge more or less. The more accurately you layout startup costs and make adjustments as you incur them, the more accurate vision you’ll have for the immediate future of your business. So, be sure to accurately define the cutoff for startup costs and ongoing expenses. Again, by outlining everything within specific categories, this transition should be simple and easy to keep track of.

Advice for Series A founders during times of uncertainty [Videos]

Once you’ve downloaded the worksheet, you can modify it to fit your own needs. Enabling tax and accounting professionals and businesses of all sizes drive productivity, navigate change, and deliver better outcomes. With workflows optimized by technology and guided by deep domain expertise, we help organizations grow, manage, and protect their businesses and their client’s businesses. Having a business website that looks good and is functional is essential — it acts as the face of your business.

How are startup costs calculated?

Calculating startup costs involves adding together both one-time expenses. These include logo design, machinery, or equipment purchases, as well as ongoing expenses, like office supplies, website hosting, business insurance and employee salaries. It’s easy to accurately plan for fixed costs and recurring monthly expenses, like your lease, while variable costs like inventory and payroll costs are harder to estimate. Adding all of these expenses together will give you your startup expenses, and can help you to budget to start your business and to create a detailed and accurate business plan. You can use this information to make purchases for your business and to explore your startup funding options.