While the idea of being your own boss is great, starting a small business can be a daunting experience. You will likely need to plan and budget your next moves before committing to anything.
The total amount could vary depending on what industry you are in, so knowing how much you are likely to spend can be tricky.
Luckily, this blog will list some of the most common business plan startup costs in Australia so you can ensure that you are spending your money wisely and are building your business towards a profitable future.
1. Choosing the right structure to register your business
One of the first decisions you may likely need to make is choosing what structure to register your business under.
While there are others out there, generally, the choice is usually between a company and a sole proprietorship (sole trader).
Although there are many pros and cons to both, companies generally take longer to establish in Australia and are more expensive to initially set up and maintain.
For example, while obtaining an Australian Business Number (ABN) is free for both sole traders and companies, there is a big difference in the cost to register your new business.
Sole traders will need to pay $39 for one year or $92 for three years to register a business name.
Companies will need to pay:
- From $55 – to choose and reserve a company name.
- $538 – to register your company
- $39 for one year or $92 for three years – to register the business name
However, your personal assets are tied to your business as a sole trader, so it’s best to weigh up your options and potentially consult an adviser if unsure.
2. Permit and license fees
Many industries are regulated in Australia either by the government or an industry body.
From certain trades such as electrical work and plumbing to financial advisers, these occupations often involve high-risk work that needs to be adhered to a professional standard and can vary depending on the area you conduct business in.
It’s best to check your local industry regulations to factor in any startup business costs before committing to anything.
3. Borrowing costs
Many small-business owners don’t have the capital to do an effective business launch and will often borrow money from banks. You may be required to pay an initial fee depending on the financial institution, as well as any ongoing fees and interest repayments.
If you borrow a large amount and need to pay it back over a long period, it might be a good idea to factor this into your costs from the start.
4. Supplies and equipment
Every business will likely need some kind of equipment and supplies.
Whether it’s materials to create your product, computers to conduct your business on, or pens to write down your ideas, there are plenty of things to be accounted for.
These costs can be either a one-off purchase or ongoing, depending on whether you decide to lease or buy the equipment.
5. Promotions and marketing
While advertising will be an ongoing expense, it’s often a good idea to develop a marketing plan that has a particular strategy around your business launch.
If you’re starting from scratch, putting money towards attracting an initial customer base could be a valuable investment.
Consider building up your online presence through a website or social media but be sure to keep track of your expenses to ensure your startup costs don’t grow too high.
6. Utilities
Typical costs for brick-and-mortar businesses include water, electricity, internet, and phone bills. These costs may also apply to home offices. However, you can generally deduct some utilities when working from home.
Sorting your utilities out from the get-go will allow you to budget for the future. Consider the expertise of a small business tax accountant when thinking about deductions and other tax obligations.
7. Technology
Technological costs could include website design, business software and information systems.
Some small-business owners choose to outsource these functions to managed IT service providers or virtual accountants to save on payroll and benefits. Others choose to purchase technology under a software-as-a-service (SaaS) model where you pay a recurring fee.
Whatever the case, consider what technology to use and how you plan to pay for it going forward.
8. Benefits and Payroll
Starting a business often involves hiring employees.
This usually means you will have to account for wages, salaries, commissions, and bonuses.
Fair compensation will ensure a lower turnover rate and help attract talent to your small business. This cost could include contractors if you don’t hire permanent employees.
9. Business insurance
Sorting out your business insurance is often an essential part of setting up a business.
No matter the industry, businesses face various risks in their day-to-day operations.
Especially when launching a business for the first time, you may not fully comprehend the risks you may face.
This could lead to a catastrophic situation where a claim is made against your business, and you are liable to pay for damages.
It’s therefore important to analyse your risks before you jump into starting a business and consider what financial safeguards you can put in place to protect yourself from the consequences.
Business insurance policies offer a viable solution to protect you financially from many risks, so it’s a good idea to factor this cost in from the start.
How BizCover helps startup businesses with their insurance
In the past, small business owners often had difficulty getting business insurance due to the painfully long forms and confusing jargon.
Many people would throw it in the “too-hard” basket and do without, only for there to be no safety net in case something goes wrong.
BizCover made it possible for small business owners and managers to easily compare and purchase business insurance from top Australian insurers.
Their mission to reduce costs, increase transparency and simplify insurance has made it simple to get insurance whether you’re in Alice Springs or Sydney – business insurance hasn’t been so easy!
Simply go online and select your preferred policy, and you’ll be covered instantly.
Key takeaways
There are plenty of costs to consider before starting a small business. While many costs are one-offs, others are ongoing and will need to be factored into your long-term budget.
Much of your expenses will largely depend on the choices you make early on, so it’s a good idea to research as much as possible and consult experts before landing on a decision.
While it may seem daunting now, it will likely be worth it in the end once you get things up and going.
Being a small business owner gives you a level of independence and responsibility that is seldom felt when working for someone else.
The point is to ensure you know what you are getting into before starting your small business.
That way, you can always feel prepared whether you are enjoying the highs or riding out the lows of being a small business owner.
Hopefully, this blog can help a small business set up a low-cost business by assisting them to understand their expenses when starting a business.
This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
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ABN 68 127 707 975; AFSL 501769
