It can be hard to know how much it could cost to start your business.
Some businesses can get up and running for next to nothing whilst others require some substantial upfront investment before they begin trading.
Identifying potential costs of starting a business is a key step for anyone looking to go self-employed.
We’ve put together a list of common costs most businesses face in their first year of trading:
Incorporation costs
The cost of registering your business will depend on the type of business structure you choose.
For instance, registering a limited company costs £50 if completed online or £71 when submitted by post.
Additionally, if you wish to trademark your business name, the fee is £170, with an extra charge of £50 for each additional class you want the trademark to include.
See the chapter in this guide on business foundations for more information on the different types of business structure you could use for your start-up.
Professional fees
Starting a new business often involves various fees, which can include costs for accounting and financial advice, insurance, licences, and legal services.
Insurance is particularly important to safeguard your business against potential risks.
For example, you might need public liability insurance if your business interacts directly with the public, or professional indemnity insurance if you provide consultancy services.
The cost of insurance can vary significantly depending on the type of business so it’s a good idea to get an idea of costs before you launch your start-up.
Additionally, accountants often charge for tasks like filing annual returns and managing employee payroll.
However, many accountants are willing to provide free guidance to help new businesses get started on the right foot.
Premises overheads
Whether your business operates from a market stall, retail unit, office space, or workshop, securing the right premises is essential.
Several factors will influence the overall costs, including the location, the size of the space, the terms of the lease, and additional amenities such as serviced offices.
Carefully evaluating these elements will help you choose a space that meets both your operational needs and budget.
Marketing budget
In order to attract customers to your business you’ll need to invest in marketing.
Marketing can cover everything from creation of a website for your start-up through to creating mailouts or events.
Whilst some marketing can be done for relatively little up front cost (such as email marketing or social media), other elements could prove more expensive.
See our chapter on ‘website and marketing’ for more ideas on how to market your business.
Employee budget
When planning your business costs, it is crucial to account for expenses related to employees, freelancers, contractors, and your own salary.
At the start, consider outsourcing specific tasks or expertise on a project basis, such as public relations (PR) or accounting, to manage costs effectively.
Don't forget
Additionally, don’t forget to factor in your personal financial needs and ensure your salary is included in your
overall budget planning.
Equipment costs
Equipment is an essential capital expense for your business and can include anything from laptops and office chairs to specialised machinery.
It’s important to stay practical and avoid overspending on high-end computers or elaborate furnishings.
Consider purchasing second-hand equipment where possible and focus only on what your business truly needs.
However, tools and machinery crucial to your operations are an exception.
These may justify a larger investment, and you should also account for ongoing costs such as maintenance to ensure they stay in good working order.
Supplies
Materials play an important role in the products or services your business will offer.
These could include ingredients for food production or construction materials for building projects.
To manage costs effectively, take the time to compare suppliers and evaluate their prices.
Check if bulk purchase discounts are available, as these can significantly reduce expenses.
Since material costs can fluctuate, it’s wise to regularly review your suppliers and negotiate for better deals to maintain cost efficiency
Did you know?
Start Up Loans has free finance and business planning templates you could use to model what it will cost to get your startup off the ground.
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Chapter 6
10 steps to your fresh start
These strategic actions can help you plan for success.
Learn more about the ten steps to your fresh startDisclaimer: The Start -Up Loans Company makes reasonable efforts to keep the content of this article up to date, but we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. This article is intended for general information purposes only and does not constitute advice of any kind, including legal, financial, tax or other professional advice. You should always seek professional or specialist advice or support before doing anything on the basis of the content of this article.
The Start-Up Loans Company is not liable for any loss or damage (foreseeable or not) that may come from relying on this article, whether as a result of our negligence, breach of contract or otherwise. “Loss” includes (but is not limited to) any direct, indirect or consequential loss, loss of income, revenue, benefits, profits, opportunity, anticipated savings, or data. We do not exclude liability for any liability which cannot be excluded or limited under English law. Reference to any person, organisation, business, or event does not constitute an endorsement or recommendation from The Start-Up Loans Company, its parent company British Business Bank plc, or the UK Government.
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