The mix of stress and excitement from venturing into business ownership makes it all too easy to overlook potential expenses. In the first years, unexpected expenses can make or break your business. Here are a few common expenses that you may not have considered.
It’s likely that, at some point, your business will need legal guidance. This could be assistance with setting up an LLC, obtaining trademarks or copyrights, or even defending against lawsuits. While lawsuits are not typically a major expense for small businesses, usually less than $5,000, even that amount of money can hurt a small company.
Depending on your profession in particular, you’ll need to account for licensing fees. How often do you have to renew your professional license or certification? Is it necessary to complete continuing education in order to retain your credentials? Include a plan for the costs associated with maintaining the credentials that qualify you to do your work.
Industry or Association Fees
Networking is a must for small businesses. Joining local and national trade organizations and associations is an easy way to connect with other professionals while keeping abreast of evolving needs or challenges in the industry. While some professional organizations charge reasonable membership fees, others are rather costly, charging hundreds of dollars annually. These fees add up quickly, especially for those who choose to belong to more than one association. Be selective and choose your memberships wisely to get the most for your money.
When operating a business, it’s important to plan adequately for taxes. You should plan for not only income taxes but a number of other taxes, as well, like payroll taxes, self-employment taxes, and FICA taxes. In many cases, working with a tax professional to resolve any outstanding taxes will help get the best possible outcome.
In its beginning stages, your business may take up a great deal of your time and energy. While investing some of your time is necessary to get your business up and running, try to determine if you are the only person who can perform each of these tasks? Are there some tasks that can be delegated so that your time is spent in a more financially advantageous way? Your time is valuable, so be sure you’re spending it in a way that’s ultimately best for the growth of your business. Fortunately, you can have control over some expenses, such as monthly services. For instance, you can hire electricity providers that offer discount electricity rates on many of their plans. They even provide interactive tools to help customers reduce their energy usage.
Delays in Payment
Just because your business is selling services or products doesn’t mean you’re being paid. One of the expenses that frequently catches small business owners by surprise is the delay in collecting payments from customers. Business owners must account for this when calculating cash flow projections. Be sure your business has enough cash on hand to continue to operate, even if some of the payments owed to you are running behind.
Building your own business is exciting and can be rewarding. Doing your research, creating a working budget, and planning for surprise expenses at the start can help to avoid frustration in the long run.