Startup Costs

When starting a new business, it’s imperative that you adequately plan how much money you will need to keep the business running until it can survive on its own.  New businesses are often started with high hopes but once reality sets in, it could actually take a while for the business to be self-sufficient, let alone profitable.

To determine how much money you will need for startup costs, separate your costs into one-time costs versus recurring costs.  One-time costs could consist of legal fees for the articles of incorporation, member or shareholder agreements and registering your business with the proper government authorities, website design costs, or assets needed such as furniture for the office and computer equipment.  Recurring costs are rent, utilities, payroll, advertising, ongoing legal and accounting fees, website hosting fees, etc.  It is best to plan for 6 months to a year of recurring fees plus all necessary one-time charges.  If the amount of startup capital is inadequate, and the growth of the business hasn’t allowed it to become self-sufficient, your business will suffer or fail.

So while it is important to think positive thoughts when starting a business, be sure to talk to an accountant to get a more realistic view of how much capital should be available before you take off and run with your next big idea.