Hidden costs of setting up a business

Posted: Thursday November 24 2016

By: Guest Blogger

Hidden costs of setting up a business

By Gemma Church

When I set up my business, I had a wonderfully naive view of my life as a freelance writer and mother of two. I expected to fit in chores and gym sessions while I flitted between my home office and meetings with clients, all while ruffling up a souffle. I was going to have it all. And I was very, very wrong.

Setting up a business is one of the toughest things I’ve had to do. It was emotionally and professionally exhausting. But it was utterly worth it. One aspect I completely overlooked was the cost of setting up a business.

I’d always recommend talking to a specialist accountant to gauge your set-up costs and gain advice on your business. My accountant was mine and my business’s lifesaver. Here are five hidden costs of setting up a business:

  1. Business insurance

You will need some form of insurance, depending on your field of business and its nature. Some insurance is compulsory, so it is essential to get the cover you need to protect your fledgling business.

Victoria Kelly, practice manager at specialist startup accountancy firm Nixon Williams, said: “It may also make sense to consider some non-compulsory insurance. It’s a decision that could save you a lot of money in the long term and a good accountant can advise you on the best route to take.”

  1. Taxes

Running your own business means more run ins with the tax man. How much tax you pay to HMRC will affect your bottom line and you need to factor taxes into your costing decisions.

An accountant can also help you to work in the most tax efficient way, so it’s a good idea to get some expert advice here. Victoria Kelly added: “Sometimes new business owners set up as sole traders as it’s a quick and simple option but running as a limited company could be a better financial decision, depending on the nuances of your business.”

  1. Professional fees

Unless you are a qualified accountant, solicitor, web designer and marketing guru – you will need to call on third party providers to bring their expertise to your business. Not only does it save you a lot of stress, it will also save you a lot of time. And, as your time is now your money as a business owner, hiring in an expert so you can focus on what you do best – your business – can be the best idea financially too.

  1. Marketing costs

So you have a brilliant business idea, how are people going to know about what you do? Marketing is a vital part of your life as an entrepreneur – whether you rely on word-of-mouth or social media or flashy ad campaigns, you need to understand what your target audience is, what will work for them and market and budget yourself accordingly.

  1. Childcare costs

I set up my business to find a way of working that fitted around my family – instead of making my family fit around a job. But, in the early days of setting up, you may find yourself away from home more often than working a 9-5.

These days don’t last once you have established a loyal customer base and gone through the setup process. But you may have to invest in some extra childcare during these early days to give your business the attention it needs and deserves to succeed.

It’s not easy – but a little pain in the short term will bring a wealth of reward in the long term as you build a brilliant business and finally get to perfect that souffle.

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