Embarking upon your first experience as a business owner is a very exciting time. Before launching a new business, entrepreneurs calculate all of the expenses they think they will incur to determine whether or not the venture is financially feasible. Unfortunately, there are several costs that are frequently overlooked and could end up making it more difficult to keep a brand-new company afloat.
Business Insurance
Business insurance is a blanket term for the many types of insurance a business may need. Each of these different insurances shields companies from damages they could suffer as a result of normal business practices. Types of business insurance include policies for property damage, legal liability and employee-related hazards. Different companies require varying insurance policies depending on the risks associated with that particular business environment.
Legal Fees
New research shows that one of the factors that impact the success of a business is external factors such as changing legal requirements, so this is important to keep in mind as you navigate the market. Entrepreneurs may need to employ legal services for a number of reasons, and those fees can become costly. You may need legal advice regarding health and safety requirements if you are opening a restaurant or manufacturing plant. Alternatively, you may seek legal counsel on how to minimize your personal liability for debts of the business.
Incorporation Costs
Costs for incorporating a business can go overlooked by entrepreneurs eager to launch their new enterprise. There are two types of incorporation in Canada, provincial and federal. The one best for you depends on the business needs and how large the company is. Federal incorporation involves more rigorous reporting requirements than provincial incorporation but provides better business name protection. Further, federal incorporation is typically more expensive than the alternative.
Although incorporating involves a small fee initially, the benefits include paying a lower tax rate than non-incorporated businesses and flexibility in how the business owner is paid. An additional advantage to conducting business as a corporation is the ability to limit or eliminate your personal responsibility for the debts of the company. To avoid hefty legal fees, you can file for incorporation on your own or by using a formation service that can help streamline the process for you.
Credit Card Processing Fees
To remain competitive in the modern marketplace, a business must accept credit cards for transactions. The drawback to accepting them is the fees charged by credit card processing companies. Fees are calculated differently depending on how payment is received. For instance, manually entering card numbers costs more per transaction than using a chip or tap-and-pay method. Specific rates are negotiated with the processing company you sign with and, therefore, they vary.
Marketing Fees
Some entrepreneurs fail to understand how essential marketing can be to a venture’s success. If no one knows about your business, it will be extremely difficult to build a client base. This is why hiring a marketing firm, even on a short-term basis, to assist with getting your business up and running can be extremely helpful. The cost associated with marketing advice depends upon how you hire an individual or firm and how long you use the services.
Starting a business involves a lot of careful planning. Even with the best of plans, things can go haywire. Give your fledgling company a real chance at success by considering the costs noted above as you create your business plan and model.
Hewitson Bookkeeping can help put your mind at ease by tackling the day-to-day numbers for you. Learn more about the services we provide by clicking here.
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