How Much Money Do You Need To Start A Business?

As a new business owner, you will need to register your business in your state and apply for a local business license/permit in your city or county. Depending on your industry, you may also need to obtain an industry-specific business permit. These initial business registration costs are usually minimal (less than $500).

There are several types of business insurance for startups, and they all have significant and ongoing business costs. The best business insurance companies for small businesses will have the coverage and support you need to file claims.

Most businesses will need general liability insurance and business property insurance, and if you have employees, you will also need to pay for workers’ compensation insurance and health insurance. Commercial vehicle and product liability insurance are other insurance types you may or may not need.

All businesses require some sort of equipment or supplies. Examples of equipment and supplies your business may need, include:

• Restaurant kitchen equipment
• Office furniture
• Office supplies
• Business vehicle(s)
• Medical equipment and supplies
• Computers
• Product manufacturing equipment
• Point of sale equipment (cash register, credit card reader, etc.)

The type of equipment and other materials you need to run your business really depends on your industry.

If you’re starting a wedding planner business, you’ll probably just need a computer and office supplies, whereas a trucking company will need commercial vehicles, GPS equipment, etc.

If you need to rent or buy an office space, this will be a significant ongoing expense and a big startup cost too, as you will need to pay a security deposit, first and last month’s rent, etc.

Internet, gas and electricity, a business phone, and data plans will also factor into the infrastructure costs of your office space. Most businesses start out as home-based or rent a business space initially instead of purchasing or building property.

If you sell a physical product, you need a certain amount of inventory to start out with (and have on-hand on an ongoing basis).

Retail stores need a certain number of finished products on hand, while food-based businesses, such as food truck businesses, for example, need to stock up on raw ingredients before they can open up shop. This, of course, does not apply to information/service-based businesses, such as consulting businesses.

You may or may not start your business with any employees. But if you do hire employees, you need to consider the following:

• Payroll costs
• Health insurance costs
• Employee benefit costs
• Recruiting costs

In this day and age, you can no longer rely just on traditional methods of marketing like business cards, signage, physical ads, etc. You’re going to have to add digital marketing to your overall strategies like Search Engine Optimization (SEO), social media marketing, and an easy-to-use website.

At the very least, you need to have a website with a professional and easy-to-recognize domain name and a social media presence.

Some different types of business software you might need to launch and run your business include:

• Accounting software
• Booking software
• POS software
• eCommerce/shopping cart software
• Invoicing software
• Inventory software
• ERP software
• Website builder software
• Project management software
• Shipping software
• Email marketing software
• Industry-specific business software (for example, specialized software for dentists, auto mechanics, restaurants, etc.)

In addition to software, don’t forget to factor in the cost of the associated hardware you’ll need to run the software into your equipment costs.

For example, most businesses will need point of sale equipment, a laptop or iPad, a wireless router, etc. For very small businesses requiring only a basic app to take payments, it’s possible that the only hardware you might need is your smartphone.

This category can include legal fees, consultancy fees, CPA or accountant fees, and fees for any other professional services you use to help launch your business. While some businesses require minimal professional services, most businesses should at least consult a lawyer and/or professional accountant during the startup phase.

You’ll more than likely find out that there are more startup costs than you initially anticipated. It’s important to set aside a certain amount of your budget for miscellaneous expenses that will inevitably come up.

Some of these expenses can include:

• Organizational dues
• Travel costs
• Shipping fees
• Loan interest
• Repairs/renovations
• Credit card processing fees (once you start making sales)

Of course, you’ll also need to make sure you have enough money to support yourself before your business becomes profitable, so make sure this cost is included as well.

This category includes online business loans, personal loans, and the three types of SBA loans small business owners should know about. Check out our article on startup business loans for more options.

If you only need a few thousand dollars to get your business started, you may consider a business credit card. These are great options if you want access to credit almost immediately so that you can spend on anything you need for your business. Read our article to find out the best business credit cards we recommend.

If your main startup expense is the equipment you’ll need to run your business then you can simply finance the equipment itself in the form of an equipment loan or lease. Similar to automotive financing, equipment financing involves monthly payments (either to lease or own) and does not typically require good credit or any collateral other than the equipment itself.

Learn more about equipment loans and leases.

Business lines of credit are similar to business credit cards because it’s easy to use for day-to-day expenses, but you only pay back what you spent. The SBA even offers its own lines of credit you can explore.

Other options for startup funding are small business grants or even using personal retirement savings.

Still more options include:

• A loan from friends/family
• Seed investors
• Nonprofit lenders