Skip to main content

Starting a new business can be exciting, but it comes with challenges, and it can’t be approached casually. Each new business owner faces the necessity of business planning, legal and tax planning, and planning for business startup costs. 


Before starting a business, it is important to research the industry, the potential consumer base, the operating geography, and the competitive landscape. 


What Are Expected New Business Startup Costs? 

To avoid IRS problems and possible business failure, business expenses always need to be monitored carefully and accounted for meticulously. That is especially true for business startup costs. 


A detailed “map” of the business may require some preparation costs beyond the exertions to conceive a budget, develop a timetable, and development of a comprehensive budget. The budget should be highly detailed for the first year but also encompass three to five years because running out of cash is one of the most common reasons for business failure. 


Business startup costs will vary by the specific business type and industry, but typical business expenses include the following: 


1. Facility costs

These costs may include the possibilities of office space, retail space, and warehouse space. In addition to the site itself, there will be some costs to fit the site with furniture and its functional requirements. And there will be some maintenance expenses as well. 


2. Equipment

Many businesses will need some type of operating equipment. 


3. Inventory and supplies

Every business will need to determine how much inventory is needed to fuel sales as well as the individual supplies required. 


4. Marketing and advertising

These may include marketing materials like signs, brochures, business cards, sales materials, and advertising costs including digital advertising and TV or radio.  


5. Website and technology

Every business needs a great website, so it is important to consider the costs of developing and maintaining a website. 


6. Utilities

These include gas, electric, phone, and internet costs. 


7. Payroll

Paying for the costs of human labor include net pay, bonuses, commissions, and healthcare always represents a significant portion of total expenses. 


8. Professional consultants

These can include the cost of legal advice and the services of a professional accounting firm. 


9. Insurance, licensing, and permit fees

The costs of insurance are important protections for the assets of one’s business. These can include general liability insurance, property insurance, and worker’s compensation insurance. 


10. Other variable expenses

These include travel and shipping costs. 


11. Financing costs

Securing essential funds is a key part of sustaining and growing a business. Understanding and budgeting for financing costs are critical to success.  


12. Taxes

Taxes are a key component of new business startup costs, and there may be programs that incentivize business owners in the first years of operation. Speak with your accountant to understand what types of taxes and relief opportunities are available to you. 


What Taxes Are Required to Start a New Business? 

Various federal business taxes may apply to a new business. Those may include income tax, employment taxes, and excise taxes. There will be Social Security payments for employees that are hired, along with certain withholding requirements.


Additionally, there are state and local taxes to be paid including property tax, state income tax, and state unemployment tax. Accounting for and meeting tax obligations as well as business startup costs are key deliverables for an expert CPA firm. 


Get Expert Accounting and Tax Assistance 

Contact Doerhoff & Associates CPA, based in Jefferson City, MO for professional accounting and tax assistance that will help you achieve the business success you are striving for. Doerhoff & Associates has one goal in mind, to provide comprehensive business accounting services—designed specifically to meet your needs.