What Does It Cost to Start a Business in United States – Ultimate Guide

how much does it cost to start a business in united states

If you are thinking or planning on starting a business, it is very important for you to know and be aware of how much it will cost you to start one. Knowing this is a crucial step to getting your business off the ground. Assuming you are the US, you might be wondering; how much does it cost to start a business in the United States?

This is a question that I had in mind and have done research about the costs of starting a business in the United States of America.

I do hope that this information will also help you in planning for your start up costs.

For example, you start a blogging business for less than $100 a month. This is one of the ways in which you can earn extra income, if you live in Houston, Texas.

However, if you want to start a restaurant business, this might cost you at least $10,000 a month.

You see, different businesses will cost differently to launch or start them up.

In this resource, we shall have specific statutory costs, and also I will share with you averages of how much it would cost to start a business in the United States.

This will help you to know the costs of starting or launching any type of business you are interested in.

How much does it cost to start a business in United States?

It will cost you about $3,500 to start to start a micro-business in the US and a home-based business will cost you between $2,000 to $5,000.

This is according to U.S Small Business Administration. Experts estimate that you should have about six months’ worth of fixed costs on hand to start a business in the US..

How much cash will you need to start your business?

When you are starting a business, you need to find out how much money you need to pay for your start up costs.

You should remember that while starting your business might be very exciting, it actually costs money.

This means that you will need to sit down and list down all your expected costs, and the amount each item will cost.

You will need to think about office space, legal fees, website costs and other operational expenses.

How to know how much money you need to start a business.

If you are thinking or planning to launch your business, you need to know where to start when it comes to finances.

I have taken time to create this resource for you.

Here is how you will figure out how much you will need to start a business and the best ways to secure start-up financing.

1. Start small.

I know that you are optimistic about the success of your business. In fact, you could even be projecting hundreds or millions of dollars within the next couple of months.

However, I think it would not be wise to follow that blind optimism as it might cause you to invest unnecessarily.

As you start your business, you would be better off if you can keep an open mind and be ready for issues that may arise later.

In this regard, you should start small, and have a plan in place to scale your business as and when the need arises.

The best approach is to test your idea in a small, inexpensive way that gives you a good indication of whether customers need your product and how much they are willing to pay for it.

If the test seems successful, then you can start planning your business based on what you learned

2. Estimate your costs.

As mentioned earlier and according to the U.S. Small Business Administration, most micro-businesses cost around $3,000 to start, while most home-based franchises cost $2,000 to $5,000.

It is important for you to know that every business has its own financing needs. Therefore, once you have decided on which business or niche you will get into, the next step will be to estimate the costs of that kind of business.

For example, you should estimate the costs for the first one or two months. With such estimates, you can be able to look and get customers even before you open. This would provide you with a way to start covering you expenses.

You should be careful not to underestimate the expenses. It is usually easy to overlook costs when your mind is on the big business picture.

Indeed, underestimating costs can decimate your company. It is argued that one of the main reasons most small businesses fail is that they simply run out of cash.

3. Project your cash flow.

Another important aspect of your business start up’s financial planning is to project the business’s cash flow.

As a new business owner, it is prudent to project your cash flows for at least the first three months of your business’s life.

You should add up not only fixed costs but also the estimated costs of goods and best- and worst-case revenues. This will help you be in a position to expect any situation in your business so that you can respond appropriately.

This is an essential step in maintaining your business’s financial health. Without being realistic about your cash flow and debt, you will not be able to get your business off the ground, especially as other costs begin to build.

To help you in managing this, consider using QuickBooks.

4. Understand the kind of costs to start your business.

This is one of the most important tips on how much it costs to start a business. There are various types or kinds of expenses that you should consider.

This will help you to manage your business’s cash flow for the short and long term.

Types of costs include;

  • One-time costs: These are costs that will be very key when starting your business. They include fees to incorporate your company.
  • Recurrent costs: When it comes to these kind of costs, they are usually paid on a regular basis. They include utility bills, rent and internet costs among others.
  • Essential Costs: These are business costs that are absolutely important to the growth of your business. For example, if you run a blog business, you might need to have an email marketing tool like Aweber to support your business growth.
  • Fixed Costs: These costs, like office rent, are consistent from month to month.
  • Variable Costs: As you start your business, you will come across costs that depend on the direct sale of your products or services.

What are the common costs you incur when you start a business?

When you are starting a business, it is important to be aware or to know some of the costs that you will incur.

As an entrepreneur, you should have a list of some of the expenses that starting a business will cover. You will be in a better position to know how much it costs to actually start a business in the United States, and also anywhere else in the world.

Here is a short list of costs you will incur as your start a business:

  • Web hosting and other website costs
  • Rental space for an office
  • Office furniture
  • Labor
  • Basic supplies
  • Basic technology
  • Insurance, license or permit fees
  • Advertising or promotions
  • Business plan costs

What Does it cost to Start a Business – Typical costs for start ups

The following table estimates very basic fixed costs for a hypothetical start-up company with few employees.

Variable costs will depend on each business’s situation and are not included in this table.

Item Details Estimated cost
Rent Co-working space membership $2,750
Website Design and hosting $2,000
Payroll 5 employees with a $35K/year salary $175,000
Marketing Costs PPC buys in your sector $5,000
Basic office supplies Paper, pens, etc. $80
Total (annualized) $184,830

Figure out Your Financing Methods.

As we have now established, starting a business costs money.

Once you have determined the estimated costs and projected business cash flows, the next thing should be to establish where you will get the funds needed.

How you get the money needed to start your business is going to determine the future of your business.

Some of the sources of your business financing could be your personal savings, loans from a bank or government, a grant as well as from your family or friends.

Many companies use a combination of different sources.

Additional funding can come through establishing business credit and different lines of credit. There is also small business loans and angel investors willing to step in at certain stages.

At this point, your start-up business should show established customers, growth since inception, a unique positioning in the marketplace, and a clear business plan on how to grow with the additional funding.

Conclusion

In conclusion, starting a business is going to cost you some money. The key question as you begin is finding out how much it costs to start a business in US or any other place.

I have taken United States as a case study as a response to a question a friend of mine in Houston asked me.

As an entrepreneur, it is possible you have a dream and a budget. Your plan might or might not work.

You should know that there are some business models that require very little upfront costs. For example, starting a blog as a business is something you can do with very little.

If you would consider running a blog as a business, then check out this resource or tutorial on how you can start a blog from scratch.

So, how much does it cost to start a business in the United States?

To recap, it will cost you about $18,000 for your first year with zero employees and about $60,000 if you have about four employees. This is according to research and data that was compiled by Shopify.

As you start your business, ensure you sit down and tabulate the expected costs or expenses. This will greatly help you in your journey of building your business.

Frequently Asked Questions

How much are legal fees for starting a small business?

According to SCORE,the majority of small business owners spend between $1,000 and $5,000 per year on administration tasks, including accounting and legal fees

Can foreigners start a business in USA?

In fact, there are no restrictions on foreign citizens generally. You do not even need to have a green card to start your business or purchase a corporation or Limited Liability Company (LLC) that is headquartered in the US

How can I start a small business in USA?

Conduct market research. Market research will tell you if there is an opportunity to turn your idea into a successful business. …

  • Write your business
  • Fund your business.
  • Pick your business
  • Choose a business
  • Choose your business
  • Register your business.
  • Get federal and state tax IDs.