If you are thinking about starting your own small business in the not too distant future, you have probably already begun to budget for the large and obvious expenses, such as equipment and rent. However, there are also a lot of hidden costs associated with starting a new company. If you aren’t careful, these expenses can quickly add up and cause significant financial strain on your new business.

The following four expenses are among the most common of these hidden costs:

High Interest Rates

Few first-time entrepreneurs have enough cash to bootstrap their business. Most have to borrow. But without a track record, banks will only lend based on your personal credit history. Should you have a low score, you’ll end up borrowing at high rates. That’s less money for equipment, marketing, and new employees.

If you’re thinking about going into business, make sure you have a good credit score.

Processing Fees

Taking payment via credit cards may be more convenient than cash or checks, but you’ll pay for that convenience in processing fees. Each time you take a card, you lose about two percent of the sale price – more if the card isn’t physically present, as in an online transaction.

For customer-facing businesses, processing fees are a fact of life, but they may be negotiable. You can shop around for better terms.

Employee Benefits

When planning your expenses, it’s not enough to factor in salaries. You also have to account for taxes, benefits, and perks. These extras can add anywhere from 25 to 40 percent to your payroll, but taxes are unavoidable, and if you don’t offer benefits, you’ll have trouble attracting top-flight talent.


While some policies may be unnecessary at first, you’d be wise to budget for liability, property, and errors and omissions coverage.

Your costs will vary based on factors related to your industry, location, and the size of your company, but insurance is worth it. A single slip-up – or slip and fall – brings the potential to shut you down.

In Closing

Surprise bills and invoices can play havoc on a new company’s financial health. However, by knowing what these hidden expenses are and taking action to avoid them, you will be able to ensure the ongoing success of your small business.