{"id":866450,"date":"2020-07-06T14:49:37","date_gmt":"2020-07-06T18:49:37","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=866450"},"modified":"2024-11-26T15:05:16","modified_gmt":"2024-11-26T20:05:16","slug":"costs-to-start-a-new-business","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/business-loans\/costs-to-start-a-new-business","title":{"rendered":"How much does it cost to start a new business?"},"content":{"rendered":"

You need to spend money to make money \u2014 but just how much depends on the type of business you’re looking to start, on top of other factors. Estimating the different costs you might incur can help you apply for financing that truly meets your new business’s needs.<\/p>

How much does it cost to start a new business?<\/h3>

Business startup costs can range quite extensively from under $1,000 to over $10,000. How much you actually pay depends on your business type, where you’re located and the equipment and supplies you’ll need to get up and running. For example, it will cost much more to start a new restaurant than it will to start a freelance photography business out of your home.<\/p>

How to calculate startup costs for a small business<\/h4>

Calculating the cost for a startup is relatively simple \u2014 you just need to add your estimated expenses together to get a full picture of what your budget should look like. Do some research into the type of business you’re planning to start in order to give you an idea of the costs involved.<\/p>

8 common startup costs<\/h3>

While your specific costs will vary, these are the eight most common factors to consider when deciding how much you’ll need to borrow:<\/p>

1. Registering your business: $200 to $400<\/h4>

In most provinces, registering your business as a corporation costs between $300-$400, while federal registration costs are usually $200-$250. But licensing and permit costs can vary, so it’s best to meet with an accountant and attorney to guide you through the process. Just be sure to work their fees into your budget as well.<\/p>

2. Office space: $5-$70 per square ft<\/h4>

Renting or buying office space is typically one of the larger fixed expenses your new business will face. On average, you can expect to pay $5-$70 per square ft. Keep in mind that the office location will drastically impact the price. If you want office space in the business district downtown, be prepared to pay top dollar. However, while larger cities are often more expensive, they may offer more amenities and easier access for your employees.<\/p>

To reduce this cost, you may want to consider working from home or out of a coworking space for those first few months while you’re getting started. Once you’re ready to expand into an office, take the cost of rent, utilities and taxes into account as well as any changes you plan on making to the layout of the office.<\/p>

3. Equipment and supplies: Varies<\/h4>

The equipment and supplies you need will vary greatly depending on the type of business you plan on opening. Because of this, it’s critical to do your research.<\/p>

You’ll likely need to finance some of your equipment<\/a>, so prepare a budget and a solid business plan so you can present it to lenders. And if you plan on hiring employees, keep in mind they’ll need their own equipment and supplies, too.<\/p>

4. Inventory: Varies<\/h4>

You’ll have no concerns about inventory if you provide a service. But any business involved in retail or manufacturing will need to calculate their inventory costs.<\/p>

To create a budget, work backward from your revenue goal. Use the price you plan on selling your inventory at and how much you realistically plan on selling in a year to help guide you.<\/p>

5. Employees: 1.2 to 1.4 times each employee’s annual salary<\/h4>

Payroll should cover more than just an hourly salary. Consider these other expenses when calculating how much you should budget for your employees:<\/p>