Calculating Your Business Start Up Costs

The total amount needed to start and operate your business is called start-up costs. This is essential because you would not want to be caught short as you start your business and it starts to grow!

Calculating costs

Make a list of everything that you need to pay for before commencing your business. Consider the following categories of costs and expenses:

BONUS: Click here to download your FREE copy of our Ready, Set Business! Guide that shows you step by step how to start your own profitable business.

Capital Costs

Capital costs include furniture, fixtures, fittings, vehicles, lease of building, equipment and other properties. Capital costs could require a large or a minimal amount of resources depending on the size and type of your business.

Organisational Fees

Download Your GuideThese are expenses required to establish your business. It includes registration and permits, legal, and website or logo design fees.

Initial operating expenses

You may not gain enough profit at the onset of your business, so you will need to have adequate cash for operating expenses until your business becomes profitable. Compute your estimated operating expenses for one month, then reserve sufficient cash to cover your business expenses for at least six months.

Personal living expenses

You also need to set aside six months’ worth of cash for your personal living expenses in addition to the six months’ amount of money for your operating expenses.

Estimating the costs

In estimating your costs, be as accurate as possible, however, you should note that it is better to overestimate than underestimate your costs.

Contact important government departments about government fees. Discuss with suppliers their product or service prices. And, talk with property managers about leasing costs.

You may also ask other business owners for advice or tips because there may be unexpected costs especially in the early stage of your business. If possible, set aside additional 10% of your budget for miscellaneous expenses just to guard yourself against unanticipated expenses.

If you’ve followed these guidelines you should be in a good position to make a decision on how to source your funds once you know your startup costs.

Next Steps

  • Compute your initial capital costs.
  • Compute any upfront regulatory or professional expenses.
  • Set aside six months’ worth of cash for your personal living expenses and initial operating expenses.

And don’t forget to grab your FREE copy of our Ready, Set Business! Guide that shows you step by step how to start your own profitable business. Get it here….

Email us at hello@youraccountingpartners.com.au or call 07 3668 0646 for all your accounting needs, bookkeeping, tax returns and compliance, business valuation and business sales.  Support and assistance for your small business needs.

James HuyVuong is a CPA and the owner of Your Accounting Partners. Partnering with businesses from start to scale thru to sale.

Posted on 15/03/2017 in Accounting Services

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About the Author

James Huy Vuong the Founder of Your Accounting Partners, a Brisbane based Business support agency. Specialising in providing bookkeeping, accounting, tax and compliance, business valuation and business sales services to local small business owners. His passion for business was evident very early on at the start of his career in accounting. He embarked on an unconventional path away from the traditional position with one of the big 4 accounting firms like most aspiring young graduate in his field. He decided instead through the lure a more diverse role, more pay and a much cooler title to work with Australia largest telco as a Business Specialist. He entered the world of business management and ownership in the hospitality industry for the invaluable hands-on experience one could not get just by reading textbooks, understanding debits and credits and passing exams. Huy has also spent a good part of a decade in the financial services industry owning and managing his family business which has lead him to start Your Accounting Partners. Your Accounting Partners sets out to help time-poor, frustrated business owners do better business by partnering with business owners on their ownership journey and making it together. Your Accounting Partners specialises in hospitality, service-base & professional services businesses. His mission is to help business owners use their business to give back to the family what it takes out. When it comes to business we say "You focus on what you do best, partnering with us and we'll take care of the rest".
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