It’s a bad move to start a business without knowing the costs involved. No business can succeed if cash is not properly managed and to do that, it is important to consider all the costs required to run a business.
About 50% of all businesses fail in the first year of work because of the same reason, not being able to handle the costs. Commonly, the costs involved in running a business are paying for rent, salaries, marketing, equipment, insurance, however you need to consider even the minute of costs to be able to know exactly how much money you’d need to run your business.
So, if you are looking forward to starting a small business, you need to consider the following costs:
Office Space
The very first thing you will need to kick start a business is to buy or rent a place. That’s one of the biggest costs that you will have to pay for.
Mostly, small businesses rent out offices that are in a cheap neighborhood because their finances are limited, and they want to save as much money as they can.
Depending on the neighborhood and city, offices can be rented between £200 to £1400.
Hiring Staff
Every business requires staff. So, next in line of costs is employment. There are two ways to hire employees. Either you hire a recruitment agency to do it for you on a predetermined fee or you do it yourself using social media and job sites which will cost you between £150 to £300. But, let’s not forget you will also have to pay monthly salaries as well in addition to other benefits offered.
Equipment
Buying equipment is costly but necessary. You can either buy brand new furniture, machines and computers or go for used ones if you wish to save money. Another option is to rent equipment. See what works best for you.
Permits And Taxes
You will need to register your business with the HMRC first because that gives you the permission to operate a business.
Every business needs to pay taxes. After getting a permit with the HMRC, you will have to pay for taxes for the profits that you earn.
You will need to pay 20% tax if the profits you are earning are in between £11,850 to £46,350. The tax amount can increase if the profit amount increases too.
Insurance
There are many benefits of buying an insurance plan before starting a business as it covers many mishaps that occur during business hours.
Injuries and damages are common, especially when you’re a new business with no experience at all. The expenses to pay for these damages can go over the roof which is why it is important to have an insurance company pay for these expenses.
Liability Insurance: Business owners need to buy liability insurance too because it incorporates for the damages inflicted by employees or injuries they suffer during work hours. Find out cost of liability insurance as it changes from provider to provider and is based on several factors.
Every new business needs to consider these costs before starting out to avoid confusion and problems.
