Calculate Business Startup Costs

How to Calculate Startup Costs for a Business

Before you can bring your company to life, you’ll want to make sure you have enough money to cover business insurance cost for a startup. Startup financing includes paying for one-time expenses and ongoing costs, such as:
  • Getting office space
  • Buying equipment and supplies
  • Hiring a lawyer and accountant
  • Advertising and marketing
business startup costsEvery startup is unique, so not every business owner needs the same amount of funding. But, if you don’t have enough money when you launch your startup, you can put your business’ long-term success at risk. In fact, running out of money is the second-most common reason businesses fail.1
With so many different costs, like rent, utilities, inventory, equipment and insurance, it’s hard to know how much money you’ll need. But you can use estimates to help you figure out how much it’ll cost to launch your startup. Once you have an idea of how much you’ll need, it can help with:
Securing a small business loan: You can work with a lender to get a loan to help fund your startup. These generally include competitive terms and may have unique benefits, like not requiring collateral for certain loans.
Applying for credit cards: Credit cards are another financing option for your business, especially in times of uncertainty. Some card companies offer 0% interest for new members, which allows you to carry a balance interest-free, as long as you make the minimum payment each month. Fundera has a list of credit cards offering 0% interest rate promotions, which can help you decide which card is best for you.*
Attracting investors: If you’re pitching to investors, your presentation should include your business’ strategy and the amount you’re asking them to invest.
Forecasting profits: If you know how much you’ll need to start your business, you can forecast when you can make that money back and how long it’ll take to profit.
U.S. Census Survey of Business Owners: Amount of Startup or Acquisition Capital2
Total Business Owners Surveyed: 16,912,993
Less than $5,000: 31.6%
$5,000 to $9,999: 7.9%
$10,000 to $24,999: 7.4%
$25,000 to $49,999: 4.5%
$50,000 to $99,999: 3.9%

Common Business Startup Costs

The expenses incurred to start and run your company can vary depending on your business type. According to the Small Business Administration, most businesses fit into one of three categories:
  • Brick and mortar
  • Online
  • Service provider
But there are some common startup costs that all businesses face. These include office space, equipment, licenses and permits, employee salaries and website development.
It can be hard to figure out how much some startup expense costs. While it might be easy to find out how much it’ll cost to get the appropriate licenses and permits, estimating salaries for new employees can be more difficult.
Don’t be afraid to reach out to a mentor, vendors or business consultants for advice. They used to be in your shoes, and they can help guide you through the process or give you cost estimates.

Workspace Expenses

When you start your business, you’ll have to decide on its business structure, and if you want to operate it from your home or an office space. About 50% of small businesses are home-based.3 These types of businesses may not have as many workspace expenses, but will still have ongoing operational costs, like utilities and inventory.
If you need an office space for your business, keep these types of workspace expenses in mind when you’re estimating your startup costs:
  • Security deposit
  • Monthly rent
  • Property insurance
  • Repairs and maintenance
  • Servicios


Your business will need materials, supplies and office equipment to be successful. This can include things like:
  • Furniture for your office space
  • Technology and software
  • Special equipment your business may need for its products or services
  • Business cards
Before you buy any expensive equipment or supplies, it’s a good idea to decide if you want to purchase or lease. Look at your business’ finances to help you choose which option makes the most sense.

Licenses and Permits

To make sure you’re operating your business legally, you’ll need to get a license or permit. All companies need a business license and an employer identification number, which is also called a federal tax ID number.
Certain industries require other specific licenses and permits. For example, if you open a restaurant, you’ll likely need to carry a certificate of occupancy and food service license. If you serve alcohol, you’ll need a liquor license. So, it’s a good idea to make sure you’re following all licensing and permitting laws.

Seguro para negocios

When you open your doors, it exposes your business to various risks. So, protecting your startup is important from the beginning. Most businesses need these essential seguro de negocio coverages:
how to calculate startup costs for a businessA good starting point for many businesses is a Póliza para propietarios de empresas (BOP). It combines general liability, business income and commercial property insurance into a single policy. So, you’ll get three coverages and cost savings from only having one policy to manage and pay for.
Don’t forget, your state may have insurance requirements for certain businesses. For example, if you have employees, you’ll likely need to carry workers’ compensation insurance.
Each small business and each small business owner has unique needs. You can work with an insurance company or local agent to help you get the coverage you need. We make it our business to find the best way to have your back. In fact, we have a team dedicated to small business owners. Obtenga una business insurance quote today and find out how we can help protect your business.

Employee Expenses

When you hire employees, you’ll have to pay them a salary. But there are other employee expenses you have to plan for, such as:
  • Beneficios
  • Payroll management
  • Payroll taxes

Marketing and Advertising

When you start your business, you don’t have the brand awareness more established companies do. So, you’ll need to pay for marketing and advertising to get the word out. Esto puede incluir:
  • Logo design
  • Signage
  • Digital advertising

Servicios Profesionales

You may need to work with other professionals to help you launch your startup and keep it running. For example, it may be a good idea to look into accounting for your startup to help you manage cash flow. Other professional services you may want to consider are:
  • Lawyers
  • IT professionals
  • Business consultants

One-time Versus Monthly Business Startup Costs

You can categorize your startup costs in two ways: one-time expenses or monthly costs. When you know how much you’ll spend to get your business started, and how much you’ll need each month for bills, it can help you better manage cash flow.
These two types of expenses can also affect business taxes. You may be able to write off business expenses on your tax return if they meet the IRS guidelines for an “ordinary and necessary” expense. This means the expense is both:4
  • Something other businesses in your industry would need
  • Helpful and appropriate for your small business
You can work with an accountant to make sure you’re deducting the right types of expenses each tax year.

Creating a Report of Your Startup Costs

After you have an estimate of your startup costs, it’s a good idea to create a report and add it to your business plan. You can include an easy-to-read chart that clearly explains your one-time expenses and monthly costs. The Small Business Administration provides a free startup costs worksheet you can use.
You can share your finished report with potential investors and lenders when you’re looking for ways to fund your startup. For example, if you’re trying to get a business loan, your lender may ask to see how much you need and why. Even if you aren’t going through a traditional lender and are looking at incentives and programs for new businesses or other alternative funding for startups, a formal startup costs report can improve your chances of getting capital.
Starting a business requires thorough planning and attention to detail. While you’ll do most of this work on your own, don’t be afraid to find help. Working with accountants, tax professionals and business consultants can help you prepare and create accurate estimates.
* The Hartford may receive compensation from companies we endorse on our website. Any company we affiliate with has been fully reviewed and selected for their quality of service or product. If you're interested in learning specifically which companies we receive compensation from, you can check out our Affiliates Page.
3 Small Business Administration, “Frequently Asked Questions About Small Business”
4 Internal Revenue Service, “Deducting Business Expenses”
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