It is an exciting time, deciding to go out in business on your own as an entrepreneur.
Many costs can pop up unexpectedly. The typical small business expenses include supplies, inventory, and other ongoing costs that go into services or products. However, there are business costs that sometimes are forgotten about or are hard to notice.
Below are ten business expenses that might be less obvious and that you might miss when you are creating a budget:
1. Licenses and Permits
Becoming an entrepreneur requires fees and permits for new businesses. Most businesses need licenses to operate, but you need to check with your local government to get the specific requirements for where you want to manage your business.
In some cases, government agencies require businesses to have additional permits. For example, having a sign in front of your business might need a permit for the sign. Licensing and permitting have initial costs, plus there are typically renewal fees.
As your business flourishes, you will need to protect your business. Insurance protects your business from financial or legal troubles. It is essential to investigate liability insurance to protect yourself and your business from losses if someone sues your business.
There are different insurance policies that you can get for your business, and add different insurance types to help safeguard your business, for example, adding home-based insurance or commercial auto insurance. This is an expense that is sometimes forgotten but is vital for preserving your business.
3. Professional Fees
In business, tools can come in many forms, such as professional services. As you start or even continue to grow your business, you might rely on experts’ help to continue to succeed in running your business.
For example, if sued by a customer, you are going to need legal help. If you need fiscal advice for your business, then you should consult the expertise of an accountant. Professional fees can get add up, but they are significant to your business.
4. Maintenance and Equipment
The size or industry of your store or business does not matter. At some point, you will need equipment. It’s essential to know how much gear you need and the costs for tools, etc. As an entrepreneur or business owner, you need to account for additional equipment you need as your business grows. Equipment and maintenance will always be a cost you should consider budgeting for, such as plumbing for your new space.
The more your business grows, and theirs more demand, there are more demands on you. So, as your business grows, you will need to consider hiring extra hands to help you with your daily operations. However, hiring employees can be costly. There are unexpected costs of running a business when you add payroll. Some employee expenses include training costs, taxes, benefits, and regular wages.
Being an entrepreneur means handling your taxes. Income tax and business tax varies depending on where you live and the type of business you operate. As an entrepreneur running your own business, you need to stay up to date with your business’s deadlines and tax rates.
7. Payment Delays
Payment delays are not an unexpected direct cost, but they do cost you. Your cash flow depends on customers sending timely payments, but when consumers are slow to pay, your business loses money.
Try and avoid late payments by fine-tuning your payment terms and conditions on your invoice and following up with late-paying customers. Make sure to give yourself a cash cushion so that you can manage those payment delays.
Some expenses are inevitable, such as inventory being damaged, lost, or stolen. Accidents happen, or merchandise is lost between suppliers and the customer. This is called shrinkage. If your business sells products, this can be an unexpected cost that was not considered.
Time is valuable, especially when we do not have much time in the day. Spending too much time on tasks that do not generate revenue for your business is a dangerous hidden expense of being an entrepreneur. Make lists of items you need to do and accomplish throughout your day. Prioritize your plan to see which tasks require the most time devoted to it.
10. Credit Card Fees
Cash-only business is fading, and most people do not carry cash on them anymore. Companies need to accept credit cards to be more convenient for customers to make purchases. However, offering credit cards comes with the cost of providing payment options.
To accept credit card payments, you need a merchant account through a bank and lease or buy credit card processing equipment. Each time a credit card is run through the machine, the processing company charges you a fee.