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Small Business Startup Costs Explained 

What will it cost to start your business

There’s no magic number or list of guaranteed expenses to account for. Your startup costs will depend on your business model, industry, location, and priorities as a small business owner.

Don’t waste time guessing how much you’ll need to start your business. 

Read this guide and learn to calculate, manage, and minimize your startup costs. 

What are startup costs?

Startup costs are what a business spends to get up and running before generating revenue. 

Starting costs vary based on business type but often include expenses like lease payments, permits, and market research. They can also include asset purchases such as vehicles, real estate, and equipment

Startup cost examples

Here are common assets, one-time and ongoing expenses to consider:

One-time expenses

  • Permits and licenses
  • Incorporation fees
  • Logo design
  • Website design
  • Brochure and business card printing
  • Signage
  • Down payment on rental property

Ongoing expenses

  • Rent
  • Payroll
  • Taxes
  • Legal services
  • Loan payments
  • Insurance payments
  • Utilities
  • Marketing costs


  • Cash to cover operations for (6-12) months
  • Improvements to your chosen location
  • Vehicles used for business operations
  • Intangible assets like trademarks, copyrights, and patents.

Why calculate startup costs?

Knowing your initial costs and expenses improves your chances of launching successfully. It helps you:

Avoid unnecessary risks:

You can avoid unexpected financial pitfalls and make informed decisions by understanding potential expenses.

Start your financial plan:

It helps you budget and determine if you have adequate funds to launch and operate until you’re profitable.

Convince investors:

A detailed breakdown of startup costs can make your business more appealing to investors, as you’ll demonstrate thorough planning and financial acumen.

Improve decisions: 

With a clear view of costs, you can make decisions about pricing, scaling, and other critical areas more confidently.

What are your startup costs?

Starting costs vary from business to business. So, how do you know your costs and, more importantly, how much money you need to cover them? 

Check out the following resources to answer those questions.

Tips for managing startup costs

Follow these steps to minimize unnecessary expenses and prioritize the right things.

Get the rest of your business finances in order

Knowing what it costs to start your business will make it far easier to get your finances in order.

Check out the rest of our startup financial resources to better understand your path to profitability.

Startup costs FAQ

Yes, businesses can deduct startup expenses even if they have no income in their first year. However, there are limits and specific IRS guidelines on how much can be deducted and how deductions are spread over subsequent years.

The most significant expense for a startup varies by industry and business model. For tech startups, it might be product development or software. For retail businesses, it’s likely your lease payments. It’s essential to analyze industry-specific data to determine the most significant expenses for your business.

Examples of startup costs include registration fees, market research, initial advertising and marketing campaigns, equipment purchases, inventory, website development, and lease payments for physical locations.

The two main types of startup costs are:

– One-time costs: Expenses incurred only once, such as business registration.
– Ongoing costs: Recurring expenses like rent, utilities, and salaries that the business will continue to incur as it operates.

Startup costs do not include long-term or future expenses arising after the business has started operating. This might consist of expansion costs, large-scale marketing campaigns, or costs related to entering new markets.