incorporation fees
To legally operate a business and to provide yourself some form of protection in the event of a lawsuit, you must properly incorporate your business in the state of your choosing. It is often most sensible to incorporate it in the state in which you actually live, although this is not obligatory. Companies often choose to set up shop in other states like Delaware or Nevada for their well-publicized status as small-business friendly places. Regardless of where you choose to incorporate your business, be prepared for this business start-up cost, and expect to pay a basic state filing fee, plus a professional service fee if you need assistance.State filing fees
The fees vary by state and by type of business you want to start up (LLC, Inc., Partnership). The basic cost range is between $25 for forming in Colorado and up to $300 for doing the same in Texas. But don’t simply go for the cheapest option. Different states have different rules and additional fees that may apply, which can make it more expensive to file outside your state, even if the basic fee is cheaper.Professional fees
There are many entities that will handle the entire process for you for a fee. Firms will typically charge anywhere from $50 to $200 as their service fee, plus any applicable state fees. Sometimes having someone handle this for you is worth the few extra dollars -- especially if they are providing registered agent services, ensuring you do not make a costly mistake, and giving you additional perks -- like a corporate stamp -- as part of the deal. Two established sites that provide professional incorporation services and a variety of packages include MyCorporaton.com and Corporate.com.It is important to make sure all items are properly taken care of and that you receive all the materials you need. For instance, to open a bank account, some banks may require you to stamp the papers with your corporate seal; if you did not get one as part of your incorporation package, you’ll need to purchase that item separately.
business identity
This part may be the easiest to skimp out on, but the relatively small expense can go a long way in getting your business off the ground. To save some money, small businesses will rely on using their personal e-mail address, not bothering to build a web site, creating a logo using Microsoft Word Art, and printing their own business cards on their home ink-jet printer. While the frugality is appreciated, the impact on your business can be far more costly.Get a URL
Get your own web site. Not only is this your web site, but it is also your business name. It is the most cost-effective way to convey your marketing message. Domain names are available for less than $8 a year. With your new domain name, you can also establish a professional e-mail address and web presence. This tiny expense adds a great deal of credibility to your business. Even if you have to hire a professional web expert to do this on your behalf, you may only pay $10 to $20 per year for the domain name and $10 to $20 per month for the e-mail address and web-hosting.Logo and business cards
Your logo speaks volumes about your business, and showing colleagues that you took the time to get one professionally made builds credibility and inspires greater confidence in your company. This may not be cheap, but as business start-up costs go, this is an important area to invest in. Even small companies working with other small companies do not feel comfortable if the business owner appears to be doing everything himself. Everyone can tell if you printed the cards on your home printer or got them from a place for free. Sure, it is good to save some money, but getting this done right is not that expensive, and you won’t have to worry about the ink running off the card if a client spills their coffee on it.attorney fees
You don’t have to pay a big retainer to a big firm to have an attorney on your side. When you establish your business, you should consider hiring an attorney to put a couple of basic items together to make sure you have your bases covered. Here are some of the basic items to consider.Nondisclosure agreement
Having a strongly presented nondisclosure agreement can save a lot of concern when you are working on a joint venture and sensitive information is being exchanged. Offering one up to a client prior to closing the deal may put them at ease about disclosing confidential data about the nature of their business.Employment agreement
Hiring employees or subcontractors to perform work for you and help your business can be very exciting. It also comes with a slew of legal concerns concerning liability. There is no need to go overboard, but if you can spend a few dollars to protect yourself -- whether it be purchasing an online form or hiring an attorney for an hour or two -- your peace of mind is well worth the additional business start-up cost.accounting
When starting up your business, one thing you must do is get a solid accounting and bookkeeping structure in place. Good financial record-keeping is critical if you want to have a grasp on your company’s profitability, particularly in the early stages. Furthermore, properly categorizing expenses and revenue can help you find those lucrative tax deductions, and -- without sounding too dramatic -- strongly help your case in the event of an audit. Proper accounting also ensures you are correctly billing your clients. Poor record-keeping can lead to double-billing, which is a customer service nightmare.Accounting software
Popular accounting software packages, like QuickBooks, will run you $100 to $400. Even the most basic version contains all you'll need, such as proper charting of accounts and reports, to help keep things in order. If you do not want to shell out the cash to buy the full version of the software at start-up, consider the online version of QuickBooks, which is $19.95 a month.Bookkeeping services
If the idea of crunching numbers and acting as chief financial officer makes you cringe, consider an outsourced bookkeeping service when you start up your business. The cost, of course, will vary based on the nature and size of your business. Such a service is typically priced by the hour, monthly retainer, or even by the item.Accept credit cards
A financial consideration, in addition to getting your company checking account set up, is opening up a merchant account to accept credit cards. You should be able to do this at your bank or you can find a myriad of providers on the web. In addition to the standard 1% to 2.5%, you will pay on the total amount of sales via credit card. There will often be a monthly statement, gateway fee or equipment leasing fee; these fees can range from $25 to $100 per month. Accepting credit cards adds legitimacy, and with businesses depending more on debit and credit cards, not taking them can mean missing out on some cash.telecommunications
With your new business, it is imperative that you have the communication tools to stay in touch with clients and effectively get the job done.Phone line
Do not use your home number as your business number. In addition to the fact that it looks unprofessional, you will not likely want to be bothered at home during the weekends. Sign up for a separate phone line with your phone company or consider a local and long-distance plan from a VOIP carrier like Vonage or a digital broadband phone solution from your cable company. Mixing business and personal use on your cell phone is more acceptable, but make sure your voicemail message is benign and professional, and carefully choose the ringtone and music an incoming caller will hear. An upset client certainly does not want to hear “Who Let the Dogs Out?” while they are being directed to voicemail.Toll-free number
Having a toll-free number cannot hurt and it is not that expensive. Sure, you pay for the incoming long-distance charges, but at a reasonable rate. Your phone company can assign you one if you have an existing account and point it to your landline or cell phone. Expect to pay a monthly fee and a per-minute charge. Another option is a virtual service that can give you a toll-free number for a small cost.Fax number
Despite the advance of e-mail and virtual document collaboration, you still need a fax number. Fortunately, you can do this without getting an extra phone line installed. A highly preferred and acceptable method is to get a fax number that routes the faxes to your e-mail address. You can even send faxes via e-mail, as long as you have a scanner to convert the documents to digital form.High-speed internet
The need for this service almost goes without saying: Make sure you have a high-speed internet connection to power your business. Dial-up is just not going to cut it, and the time you'll save with high-speed web browsing and file-sending will more than cover its cost.permits and insurance
Depending on your business and what you have to lose, permits and insurance may be a non-issue when you're starting up, or these could be some of the more costly expenses you will have to incur.Permitting
Obtaining a permit can be a lengthy process and is most commonly communicated through the state you are operating in. However, some permits, like a DBA business name, are filed at the county level with the local clerk of court. Additional permits for construction companies or restaurateurs, for instance, can increase business start-up costs, with the amount varying greatly by state and by the size of your business.Permitting can also incur additional costs, such as those required to obtain appropriate insurance coverage or post a bond. DBA permits in Colorado, for instance, will run you $1. For specific lines of business, you will encounter different kinds of costs. For instance, if you operate a plant that requires hazardous waste disposal in the state of Ohio, prepare to pay $9 per ton per month for off-site landfilling, or $10,000 a year for off-site surface impoundment. The reality is that the permitting process can be complex and expensive, but it can be even more expensive if you break rank and do not obtain the proper waivers to conduct business. It is best to speak with an adviser or the state office regarding which special licenses, permits or waivers you will need to legally practice your line of business.
Insurance
This is a big cost for businesses, especially if you have employees. You will need health insurance, worker’s compensation, errors and omissions, liability, and even key-man life insurance in some cases. Many small businesses will forgo such coverage because, well, it is not needed and they have nothing to lose. As you grow, acquiring health insurance coverage for your employees may be something you need to offer to attract and retain qualified workers. Even if you are a one-man show, it may be easier for you and your family to get health coverage through a business enrollment than it would be to get insured individually through a provider.For other types of insurance, such as liability or E&O, to win certain business deals -- especially government or larger products -- you may be required to have a certificate on file showing some form of minimum coverage.
Workers’ compensation insurance costs vary depending on the type of industry you are in. For instance, if your employees primarily work in an office setting, the premium would be lower than, say, if you were operating a roofing company where there is a greater chance of an accident that may result in injury.
bills, bills, bills
This laundry list of business start-up costs is not comprehensive; when you start a business, there always seems to be an additional fee here or an additional charge there. The reality is, as great as your business idea may be, if your bank account is in the red thanks to overdraft fees, your million-dollar idea is going to cost a few extra dollars to implement. Expect to put at least $2,000 to $3,000 aside for business start-up costs and pay it out before you even think about going out and selling your services.If you are comfortable with that number, fantastic -- go get your ducks in a row and make it happen. If that number makes you cringe, well, consider going another route or set your sights on saving up to make sure you have that cushion to get your business legally and viably up and running.
Resources:
http://www.sos.state.co.us/
http://www.godaddy.com/
http://www.legalzoom.com/
http://quickbooks.intuit.com/product/accounting_software/product_comparison.jhtml
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