In case you haven’t noticed, starting and running a business is expensive. And more than likely, you’re bootstrapping it. So I know every penny counts. You want to be able to cut corners wherever you can, and the last thing you want to do is part ways with your hard-earned cash when you don’t have to.
I know, I know. It’s popular for solo-entrepreneurs to brag that they started a business with a $500 laptop and stack of business cards, but that’s only partially true. Of course you can get started this way. But in order to establish a legitimate business, you’ll quickly run into quite a few more expenses.
It’s often the boring stuff that we want to overlook. But trust me when I say you can’t afford to ignore these 6 pesky business expenses:
1. An Accountant
I know you might be proud that you’ve mastered doing your family’s taxes, but this is a whole different ball game. Hiring an accountant for your business is not an optional expense. Even if you run a small operation out of your home office, it’s important that you work with a knowledgeable accountant to help you navigate the rules.
2. Business Filing Fees
To run a legitimate business, you’ll have to register it with the appropriate legal entities. Determine the business structure type – sole proprietorship, LLC, corporation, etc.— submit your file, and pay the corresponding fees. Business filing may also require DBA (doing business as), a fictitious name statement, and sometimes a reseller’s license.
3. Legal Assistance
To avoid potentially serious problems down the road, you’re going to have to suck it up and hire an attorney. Yes, they can be expensive, but that is because their expertise is critical. You will need legal assistance to write contracts and look over agreements for you, at the least.
4. Business Insurance
You may not think so, but your business needs insurance for protection. I don’t care if you’re a copywriter or a scrap-booking consultant, a real business needs proper insurance coverage. Liability / E & O insurance is a must, and if you have employees, you'll also need worker’s compensation insurance.
5. Social Security (FICA) and Medicare
One of the things you don’t think about when you’re collecting a pay check, is that your employer pays into Social Security and Medicare for you. As a self-employed person, you’ll have to pay the employer portion for yourself when you're able to draw a paycheck from your earnings.
6. Health, Life, and Disability Insurance
We all know health insurance is a big concern when starting our own business. If you’re not covered by a spouse, you’ll have to look into finding your own coverage. Life insurances is also important, especially if your business income supports your family. And disability insurance is critical, because, unfortunately, more people become disabled during a lifetime than you might think.
I know none of these things are fun to think about, but you can’t operate your business with your head in the clouds. Spending the money to cover these important business expenses will ensure that you’re legit and will give you peace of mind.