15760 Ventura Blvd, Suite 610 Encino, CA 91436
15760 Ventura Blvd, Suite 610 Encino, CA 91436
Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

6 Surprising Costs of Starting a Small Business

A recent study revealed that 9 out of 10 small business startups fail. Almost 30% of those failures are due to a lack of sufficient capital.

A passion for finance isn’t a common labor of love that leads to a startup, but having knowledge about the financial aspects of running a small business can help you manage your business and your money to get you through to more prosperous times. Read on for 6 standard business costs that often surprise new entrepreneurs.

  1. Loans

It costs a lot of money to launch a small business and keep it going until it becomes profitable. You also need to cover your own personal costs. It’s common for new entrepreneurs to take Small Business Loans only to be burdened with debt during the lean early days. There are other financing options to consider including self-funded 401ks or raising funds from friends and family.

  1. Legal and other professional fees

You might think that you can get away without a lawyer or that a cheap and cheerful online incorporation will be enough. However, if you don’t get the legal details right in the beginning, you could be setting yourself up for more trouble in the future. Expert legal and accounting advice at the start pays for itself over time.

  1. Fees, licenses, and permits

When you start a small business in Los Angeles, you will have to pay for a variety of fees and licenses to do business legally. LA is home to some great talent, but it’s an expensive place to do business.

  1. Taxes

If this is your first foray into self-employment, you are in for a shock. You might think that if you aren’t making money for yourself that you won’t have to worry about it. However, even if you’re just making enough money to cover your costs, you’ll still need to file your personal and business taxes and will probably end up owing something. Working with an accountant can help minimize your tax burden.

  1. Employee benefits

People are the biggest expense of any business. However the costs go beyond salaries and taxes. If you have full-time employees, you’ll need to offer some form of benefits, and many startups offer perks to their employees, like snacks or even lunches.

  1. Office costs

Okay, you might be expecting this one. But office and administration costs include more than rent and utilities. You also need to be prepared to pay for:

  • Computers and other office equipment like phones, desks, chairs, etc.
  • Phone lines and answering services
  • Office cleaning supplies
  • Office supplies ranging from paperclips to printer paper
  • Computer software and software licenses

The saying goes, being forewarned is being forearmed. If you’re getting ready to launch your company, do your research and build a relationship with a trusted accountant to keep your finances on track. Contact the team at Accounting Taxes Payroll Partners today at 818-436-2775 to learn more about how we can help your small business succeed.