Have you decided to take the plunge as an entrepreneur? Sure, the freedom of being your own boss and income flow are rosy aspects of running your business, but nobody tells you about the hidden costs involved!
Whether you are starting a record label – where music licencing fees are a must – or running a hairdressing salon that requires insurance, so long as you are operating from a shop, there are many costs you may neglect.
The following is a list of little known fees new entrepreneurs usually overlook.
- Licensing or Permit Fees
Many people are already familiar with various licenses they must obtain before they can run their business legally. However, what they are unaware of are the factors that can affect their business licensing fees. For instance, Federal industry regulations or state/local policies relating to your business. The physical location of your shop and various jurisdictions which your company operates under could influence the cost of your license.
- Employees, Insurance and Taxes
You could be a sole business owner, but at some point, you will want to scale. Hiring employees is the next step to follow. Employees are paid for their work (of course!) which means you will have wages and payroll. Depending on the nature of your business, you may require experts to manage the payroll. Full time employees may require benefits and insurance.
As an entrepreneur, you are expected to purchase business insurance, shop insurance, liability insurance and unemployment insurance- some owners consider health insurance for their employees in case of unforeseen incidents on the job. Note, it is more expensive if you have less than 10 staff.
Don’t forget your taxes. The standard income tax is common, but there are additional taxes which a lot of business owners ignore. They include self-employment tax, pay-roll tax, and Medicare. Check with your local authorities for any applicable taxes.
Shrinkage (or depreciation) is the loss of value of inventory over time between purchase form your supplier to purchase by a customer. Nobody plans to lose inventory but calculating shrinkage may include shortages from a supplier, errors of customers getting more than they request, damaged products or shoplifting.
- Equipment Maintenance and Upgrades
You know the tools required for your business to create a product or offer a service, but minor equipment costs are often neglected in the mix. Remember to add basic office equipment in your budgeting plans. Think items like staplers, A4 papers, copiers, chairs, scanners and printer ink.
This list is by no means exhaustive, depending on the size of your business or shop premises, there will be more costs to consider. Perform regular reviews to ensure you don’t miss anything.