While launching any startup, at a certain point you’ll have to face with one pervasive thought: expenses. Money flows in different directions, even though the first revenue looks like a distant spot on the horizon. The time to calculate the initial expenditures comes when you are planning future recurring expenses. During this frenzy, it’s easy to forget a few really important ones. Here are 5 most commonly overlooked startup expenses you should keep in mind when launching your business.
1. Data and hosting costs
If you are launching an app or an online company, at some point you realize that free data is limited. Loads of websites rely on it, however, if you’d like to make a unique successful product, you need to get out of the free-data box. That’s exactly where new expenses roll out. Good data costs good money.
The second problem that comes hand-in-hand with this is data loss and weak hosting. If you originally decided to save a little and opted for a cheaper hosting plan, it may cost you thousands in potentially lost customers as your provider just couldn’t handle all the activity. Choose a reliable hosting provider and invest into secure online backup services to keep all your data safe and sound – and don’t forget to regularly update the plans if your business starts booming.
2. Accounting costs
If you have a business degree, you obviously think you can handle all the accounting yourself. Why pay more? However, once your startup is up and running, you’ll have much more important tasks on your plate – from pitching new investors to working with influencers and headhunting for new talents.
Keeping all your books in check; creating payrolls, managing loans, and creating financial reports for your investors can consume more of your valuable time that you think. Hiring an outsourced or part-time accountant is a smart and low-cost solution you should not overlook. Spend your time on driving more profits instead of getting lost in numbers.
3. Property and Casualty Insurance
Certainly regulations vary from place to place, however rates to carry mandatory liability coverage can run into the $10,000 to $20,000 range per year. That’s a few extra thousand per month to add to your budget.
Having the right insurance is your potential shield against bankruptcy in case things go to court with your board members or your programming code fails to work correctly and you won’t be able to deliver the service. It’s worth paying monthly to keep your back protected, instead of going AWOL when things already gotten rough.
4. Trademarks and Domains
Buying one domain is cheap – buying a bunch of domain extensions can rise the costs drastically. Yet it’s an important step to make if you want to avoid having troubles with copycats plagiarizing your brand name or hefty domain squatters buying all extensions to re-sell you afterwards for ten times more. Besides, if you ever plan to expand your business internationally, you’ll need localized domains as well to avoid international businesses operating under your name and taking away your customers.
Once you become popular, your brand name will need extra legal protection, there are different trademark laws and copyright laws and fees to consider.
5. Employee Benefits and Taxes
Last, but definitely not least – you want to play nice with your team and the government. If you haven’t previously filled in a payroll, you probably have no idea how much extra you’ll be paying overhead. These rates depend on your city and/or state, and often federal regulations are involved as well. That’s solely is another good reason to hire an accountant.
There are amazing low cost employee benefits, however most of your teammates would also want a full insurance coverage, 401K plan and more, which can eat up a huge chunk of your budget.