How Much Does It Cost to Set Up a Business?

Starting a business is a lot harder than most people think. It’s rare for a business to be so in tune with its niche that it can survive with minimal effort.

Small businesses, with 500 employees or less, make up over half of the working population in the US, so their growth and success are vital to the economy. Every month, over half a million new businesses are launched. However, 30% will close within two years, and around half will not hit the five-year mark. All in all, only about a quarter of all small businesses will last for 15 years or longer.

Alongside bad marketing and lack of expertise, one of the biggest pitfalls for new businesses is poor financial management. So, if you’re looking to avoid failure and run a business successfully, getting familiar with business expenses — and how to prepare for them — gives you a better fighting chance. And you can start with the costs below:


Before you start a business, you should research on the industry and market structure very carefully. Some startups neglect this step, causing them to fail in executing their ideas. Consider hiring a market research firm to help you with the initial assessment, but you would need to include the research expenses and fees in your budget.

Fees, Permits, and Licenses

One of the first things to decide on when starting a business is the type of legal entity it’ll be. It determines everything from your personal liability to the way your business is taxed. If you’re forming a limited liability company, then fees can range between $40 and $500, depending on your state. If you’re looking to build a corporation, states usually charge anywhere from $100 to $250 for filing the articles of incorporation, plus an $800 to $1,000 franchise tax fee.

Your state may also require fees for business licenses, publication, and for reserving the name of your business. Some businesses only require basic licensing, while others might need licenses specific to their industry. The costs for permits, licenses, and other fees will vary depending on the type needed and the state where your business is located.


Overheads are what it generally costs to run a business on a monthly basis. Renting the office space, payroll, inventory, utilities, office supplies, and other ongoing expenses all fall under this category. In most cases, overheads can be declared as business expenses.


Most new businesses will have an immediate need for equipment. And it can be costly depending on your industry, especially if you have a lot of employees who need their own equipment. If you’re concerned that you won’t be able to afford the necessary equipment, consider the benefits of equipment financing, ranging from loans to leases and lines of credit.


When you start your business, you’ll need to spread the word about your products or services. Without investing in marketing, it’ll be hard to acquire sales.

You may want to consider putting up a website to establish your online presence. If you’re not familiar with web design, you can hire a web design company to build your website for you.

Once you have a website, you can integrate promotional tools that can make online marketing more convenient, such as an autoresponder program for gathering information on potential customers via sign-up forms.


Last but not least, your business needs protection the same way you protect your health, your house, or your car. There are different kinds of business insurance, depending on your industry and other preferences, which can save you money and energy in the future.

Being realistic about your budget and accurately estimating your startup costs will go a long way no matter how stressful things get. Good business advice from more experienced entrepreneurs can also help your business succeed. All the trouble will be worth it if it means avoiding becoming just another statistic like all the other businesses that have failed in the past.

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