7 Hidden Costs that Break a Small Business

Sara Stringer

November 05, 2013

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When you’re about to go into business, you’re busy thinking about how to keep your business plan together and increase production enough to maintain yourself. That’s exactly how some hidden costs are able to slip past you and cause trouble. Small, unanticipated costs put a strain on your vision by hitting you in the wallet. Plan now and you’ll see some good savings during the first year that will help you grow.

Internet

Internet connectivity for a small office involves a reasonably fast connection to a small group of people. For the husband and wife business, a router, modem and ISP is usually all you need. Larger businesses may require more equipment, like servers.

One easy way to cut costs is to buy your own modem. It may save money with your ISP. Some Internet promotions can be found here if you still need a bit more help. The more equipment you own, the fewer fees you have to pay to subsidize those charges. That knocks tens of dollars off of most Internet bills each month.

Office Space

Don’t fall into the trap of renting the office you want and growing into it. Instead, rent the office you need now and grow your business accordingly. As you grow, and as the need for staff grows, find creative cubicles and work stations to accommodate as much as you can. You can save money on office supplies by ordering online and taking advantage of free shipping.

Personnel

To save money on some personnel, outsource to contractors. There are a variety of contractors in the US that you can use to do the work you need to get ahead. Small things like launching a new landing page, or improving the SEO of your current page often require one person to maintain something for a short period as you launch. Before you hire staff, consider outsourcing.

Legal Help

Pay as you go legal services probably aren’t the best for actual legal troubles. They may not adequately address the needs of your firm as it grows, and may not be familiar with your work the way a family attorney might be. Most of the legalities of incorporation can be done yourself, for more complicated matters you should ask friends and investors for ideas and recommendations.

Luncheons and Meetings

Talk with a tax professional and get clear on what can and cannot be used as a deduction when you file. Some of your luncheons can work as business luncheons if you work in staff meetings or go out with clients. You can also use services like Skype or GoToMeeting to cut down on travel time and still get face time over the Web.

Shipping Services

Shipping merchandise via air or ground can make a huge impact on the costs you pay for shipping. Look at the tariff schedule for the shipping carrier you want to use, and compare the prices you see to find the lowest. Weighing your packages and getting the exact postage necessary will also help save money over time for volume shipping companies.

Government

The costs of operating your business, and the taxes associated with doing so are often hard for the first-timer to judge. You should expect to pay out roughly 25% of your earnings in small business taxes to the government, in addition to anything you owe for medicare and social security. One of the best things you can do is get someone to keep your books for you, and hire a tax professional. The costs of doing those things will be mostly offset by the savings they will bring to you in taxes each year.