Entrepreneurs may be in control of their own destiny when it comes to running a business, but they still need to pay for their startup's expenses. Here are five common expenses you should account for before you open your doors.
Entrepreneurs may be in control of their own destiny when it comes to running a business, but they still need to pay for their startup's expenses. Many small business owners calculate these costs when outlining their financial projections in a business plan. However, even the savviest entrepreneur might forget to invest in an area or two (or more) that is necessary for their small business to succeed. Some of these items might even be hidden in plain sight, like desks and chairs.
Whether you're running a business from an actual storefront or doing everything online, don't let these expenses take you by surprise.
According to the U.S. Small Business Administration, employee salaries are a common startup cost that most businesses have no matter what. But it's difficult to hire employees if you have not obtained an Employer Identification Number (EIN) yet.
By filing for an EIN, which is also referred to as a federal tax ID, your business entity can be identified by the IRS – using a number other than your Social Security number. With an EIN, small business owners can hire employees, open a business bank account and establish a credit profile.
2. Office equipment
For some entrepreneurs, particularly those that work from a coworking space, this type of expense won't impact them. For others hunting down an office location or storefront to conduct business from, remember that you'll need more than a laptop to get the job done.
Aside from desks and chairs, what else is considered necessary for your startup? Run through this checklist to make sure you're not forgetting anything.
- Computers (laptops and/or desktops)
- Computer software (antivirus, accounting, payment processing, and Microsoft Office Suite)
- Internet connection (routers, web server, on-site backup, and the cloud)
- Phones and phone lines (see "Separate carriers" below)
- Printer (including paper, ink and toner cartridges)
- Fax machine
- Lamps and overhead lighting
- File cabinets
- Stationery (pens, paper, envelopes, paper clips, scissors, staplers, hole punchers, postage stamps, notebooks, Post-its, and folders)
- Trash and recycling bins
Once you've accounted for these necessities, you can acquire other essentials, like items for the break room (coffee maker, mugs, microwave), calendars, clocks, whiteboards, fire extinguishers and first aid kits, cleaning supplies, and office decor.
3. Separate carriers
It goes without saying that entrepreneurs recognize the importance of having phone lines, desk phones and smartphones, and WiFi for their small business. However, costs add up quickly when small businesses interact with a different carrier for all of their communication needs.
One technique for saving money is to work with a telecommunications firm as your single point of contact. These firms also provide VoIP phone services. With VoIP, entrepreneurs can make phone calls at any time and from any location using the internet. This allows small businesses, in the long and short run alike, to improve how they communicate with customers.
4. Business licenses and permits
Think you don't need any of these to operate a startup? Think again. There are over 100,000 jurisdictions in the United States, and each has its own required licenses and permits necessary to operate a small business.
Consult with the city or state that you do business out of to determine what you'll need, as many of these are contingent on your location, industry and type of entity. A few of the most common permits include tax registrations, health department permits, reseller’s licenses, and state-issued occupational licenses.
5. Corporate kits
One way that many entrepreneurs legitimize their small business is by creating business cards. Later, however, you may consider investing in a corporate kit for your startup. These kits come with a hand-held corporate embosser that allows you to authenticate corporate documents with your corporate seal that can be used in lieu of a signature. Other materials in these kits include sample bylaws and minutes, a stock transfer ledger, and five customized corporate share certificates.