Do you know the hidden costs of running a small business that could bust your overall budget? What happens when you run out of office supplies, have to pay rent, your computers get corrupted and your online store crashes? Imagine if that happened all at once! Our newest infographic shares the top eight costs of running a small business that you should be prepared to handle at any given time.
One of the most important checks your small business will write each month is to your insurance provider. It’s vital to protect your business, yourself and your employees. Look into policies that cover public liability, negligence, illness and injury.
With salaries, paid-time off, sick leave, health insurance, parking, employee benefits, and turnover… employees cost more than you might expect. A good team is a money saver — so be certain to train your employees and ask for referrals when hiring to save you time and funds.
Whether you have an online store or a storefront, you will eventually require repairs and maintenance. Think about your company’s website, smartphones, electronics, etc. — what happens if they all suddenly stop working at the exact same time? Save a line in your budget for the unexpected.
4. Industry Association Fees
To get better acquainted with the small business industry, you’ll need to network. To accomplish this, consider joining a trade association that has potential clients and industry veterans involved. Their annual fees are up to $200 (depending on which ones you select), so only join a few at a time!
5. Legal Services1
Every business, especially small businesses, will inevitably require a great lawyer. Unfortunately, some of the best lawyers can charge hundreds an hour! To cut down on legal expenses, ask for all costs upfront in order to negotiate a fee. Seek out reputable and smaller legal firms that are more willing to negotiate fees and billing schedules.
Have you ever run into issues with your inventory? This could be a result of theft, shoplifting or administrative errors. The Global Retail Barometer states that the annual loss to retailers in the U.S. at $42 billion! While it is impossible to halt downsizing completely, you can reduce your exposure by implementing cyber security, in-store security and a loss prevention staff.
7. Social Security1
In the private and corporate world, employees cover half of your Federal Insurance Contributions Act (FICA) contributions. But because you are your own boss, you will have to fund 100% of your Social Security. To cover yourself while maintaining your budget, be sure to set aside additional cash toward your retirement fund.
8. Random Costs
Other potential hidden costs of running your own small business include paying for licenses, permits, fees and hiring an accountant or tax advisor. To prepare for future unexpected costs, try setting aside 20% of your revenue to cover them.