6 Startup Expenses to Include in Your Budget

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Starting a small business is refreshing and fulfilling, but it also comes with myriad expenses. Being unprepared for startup expenses means that you will quickly find yourself in over your head in terms of finances. If you’re not prepared for these startup expenses, you could quickly find yourself in over your head financially. It’s important to know how to budget for small business expenses properly. So, let’s outline a few startup costs you need to expect.

Business Plan

When starting a small business, a business plan is one of the most important things you should budget for. Essentially, it outlines your business goals, strategies, and how you plan to accomplish them. Business plans don’t necessarily need to be paid for, but they are worth considering. 

A business plan will be your guide to starting your business and paying for everything else that follows in this article. It can help you raise investment, secure loans, better manage your finances, and forecast your sales. Early on, you and your business will be learning how to operate and execute successfully, and a strong business plan will keep you working toward strategic targets, so it might be one of the startup expenses considering.

Given the implications of a strong business plan, many entrepreneurs seek external expertise to craft it. You can find business plan templates online for free, but it may be worth working with a small business consultant who has helped successful entrepreneurs in the past. The average cost for a business plan can range from $2,000 to $20,000, but a consultant will better prepare your business to secure funding and execute in the early days.

Licenses & Permits

Another consideration for small business startup expenses you need to factor into your budget is the cost of any licenses or permits you might need. If you’re not planning on running as a sole proprietorship, be ready for incorporation fees in your state, which can be up to $500. Additionally, every small business needs some form of insurance, which can cost anywhere from a few hundred to a few thousand dollars per year depending on your business type and size. If your business plans to sell physical products, you’ll need to budget for a sales tax license, which vary by state but are typically around $50.

The key thing you need to know when you budget for licenses & permits is that your small business probably doesn’t need every permit under the rainbow. While the three fees I mentioned above are pretty standard, you’ll need to do your research to find out which permits are required for your specific business type and location.


In your earlier stages, there’s a lot of extra help that you’ll need to utilize. Let’s say you looked at all your state’s small business licensing requirements and got overwhelmed. It may be a sign for you to hire a legal expert. You may also need to hire an accountant to help you with the financial side of things or a web designer to help you get your small business online. The cost of hiring these experts will obviously depend on their level of experience and what exactly you need from them. But, it’s important to include in your budget nonetheless.

If you’re planning on hiring employees, there are a few more small business startup expenses you need to factor into your budget. The first is payroll software, which will help you manage employee payments and taxes. This software typically costs between $50 and $100 per month. You’ll also need to pay for workers’ compensation insurance, which covers your employees if they’re injured on the job. This insurance typically costs between $500 and $2000 per year, depending on your business type and the number of employees you have. Finally, don’t forget to factor in the cost of employee benefits, which can include health insurance, 401(k) plans, and more. These costs will vary depending on the size and type of your business. But they can quickly add up, so it’s important to have a budget that can allot for them all.

Budgeting for your staff can also give you an indication of who you’re looking for. How much experience can you afford? Does the work require a full-time employee, or can you contract out the work in early stages? The best way to answer those questions is to set a target for how much you are willing to spend in order to hit specific milestones.


Depending on your industry, you may need to buy a LOT of physical equipment for your business. If you’re planning on selling physical products, you need to factor in the cost of inventory. This includes the cost of manufacturing or purchasing your products, as well as the cost of shipping and storing them. If you’re committing to monthly supplies, it’s important you commit to a quantity you can both afford and quickly resell.


You will also need to factor in any technology that your business utilizes. Regardless of what venture you’re going into, your small business will likely benefit from technological investments. It’s just a matter of knowing what’s right for your business and vetting tech solutions thoroughly. For example, most businesses heavily depend on their customer feedback in order to grow, which is where customer relation management (CRM) software can come in handy to automatically track your prospects, analytics, and automate your sales efforts.

Your business might also invest in technology that helps customers pay in store or online. You might also invest in inventory tracking and ordering tools, video conferencing, business suites. May we suggest a free tool to track your cash flow and expenses?


Creating your business’ marketing budget is no small feat. Once you’ve outlined your goals in your business plans, it’s easier to identify to start testing marketing channels and investment. You’re probably inclined to get your business on social media, and that’s a smart move! If you can afford it in your earlier stages, a small investment in social media advertising can specifically target your potential customers and drive a lot more traffic to your business.

However, don’t think that you have to shell out a huge marketing budget in order to increase your brand awareness; some of the best marketing services and strategies your business should use cost next to nothing. The key to marketing spending is identifying your targets, and then budgeting accordingly for services that can help you reach those targets. If you’re utilizing your marketing resources creatively, you can generate incredible results for a very low cost.


As a small business owner, you’re responsible for paying federal, state, and local taxes on your income and profits. These taxes span a few hundred to a few thousand dollars annually. How much you will have to pay depends on the type and size of your business. Additionally, if you’re selling physical products, you’ll need to pay sales tax on each sale. You may also want to utilize tax filing services or experts to make this process easier for you.

While taxes may seem like a small business expense that’s out of your control, there are a few things you can do to minimize the amount you owe. Make sure you’re taking advantage of all the deductions and credits you’re entitled to. Additionally, try to set aside money each month to cover your tax bill. This will help you avoid any surprises come tax time and ensure that you’re always prepared.

It’s easy for startup expenses to grow higher than you anticipate. As a small business owner, you need to think critically about your priorities and budget for the future. Having a way to track your expenses in real-time as your business develops is critical to your small business success.

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