1. Registration costs for startups - £
When you first begin your business, you will first need to register as either a sole trader, a limited company or a partnership. There are lots of pros and cons to consider when deciding which legal structure is right for your business. Make sure you understand those before deciding.
Sole trader - registering as a sole trader is free via the HMRC website.
Partnership - forming a partnership doesn’t carry any formal costs but it’s a good idea to have a partnership agreement in place, which could cost money to draw up
Limited company - registering a limited company costs around £12 if done online, or £40 if done by post. Trademarking your company name costs £170, with an additional £50 for each additional ‘class’ (industry) you wish to register in.
2. Business premises costs for startups - £££
If you don’t plan to work from home, then you will need to secure business premises. Your chosen location is very important, but so is the cost. Prices vary depending on the area in which you open your business, the size of the space you require and the terms of the lease.
The average rental cost of office space in the UK is anywhere from £150 - £1500 per person, per month (Instant Offices)
The average cost of retail space in the UK is anywhere from £1,050 per square metre per year, to £14,000 per square metre per year (Statista)
3. Legal and insurance costs for startups - ££
You must factor in any licencing that your business may need, such as to play music, to sell food, to sell alcohol or various other business activities. You can view a full list of activities that require a licence at Gov.uk.
The cost of a licence depends on which type of licence you are applying for, and as local authorities set the costs for the various licences they provide, it will also depend on the area in which you are trading.
While we’re covering the legal side of things, your business will also require insurance from the day you begin to operate. There are many types of business insurance, but the main ones to consider are public liability, professional indemnity and employers’ liability insurances. Find out more about your legal responsibilities when you become an employer.
Insurance costs for startups
Public liability insurance costs start from around £50 per year
Professional indemnity insurance costs start from around £53 per year
Employers’ liability insurance can start from around £40 per year, depending on number of employees and risks they face at work
4. Transport costs for startups - £
If your business requires vehicles of any kind, you will need to factor in the cost of:
purchasing or leasing these vehicles
taxing them for road use
ensuring that they are appropriately insured
Commercial vehicle insurance premiums tend to be slightly more expensive than personal vehicle insurance and it is a legal requirement if using vehicles for commercial purposes.
Business vehicle insurance and commercial vehicle insurance are two separate things and you may require one or both depending on how you use vehicles for your business.
5. Marketing costs for startups - £££
Website creation and hosting, the creation of an online store and various other technology related expenses such as email domain hosting soon add up. You must be sure to include these costs when planning, along with any marketing you may wish to carry out for the business.
Give yourself an initial budget to get set up with a brand and some online tools and software, or to engage with a marketing professional. Then, consider which channels are most appropriate to your customers:
Online: advertising, pay per click - look at average costs in your area/industry, content placement/sponsorship
Social: free vs. paid, audience building
Physical: leaflets and literature
6. Equipment and assets costs for startups - £££
This cost will likely be a one-off expense at the beginning of your business journey, with smaller equipment and asset expenses being accounted for periodically as an ongoing part of the business.
In the initial stages, you will need to account for every item you require to operate, from technologies such as POS systems, laptops and computers to furniture such as desks, chairs and other office equipment.
Focus your funds where they’ll make the biggest impact, and on things that are important to you. Sites like Gumtree and Facebook selling groups can be excellent sources for second hand office equipment and IT stocks.
7. Stock management costs for startups - ££
If you’re setting up a retail business, it’s wise to shop around when it comes to selecting a supplier, to find the best deals and terms. Though suppliers work on a monthly basis, offering you up to 30 days credit to pay for your stock, as a startup you might find credit hard to come by, so be prepared to pay upfront.
You will require systems for repeat ordering, deliveries and storage of your stock too - these can be handled manually, if you have the time and expertise, or you can invest in technology to help.
8. Employee costs for startups - £££
As well as insurance as mentioned earlier in this post, you will also need to pay your employees for their time. This cost obviously varies depending on how many employees you have and their individual salaries. It’s important to factor in:
National Insurance Contributions (NIC)
Auto-enrolment pension contributions
Remember to make provisions for holiday pay, sick pay, maternity and paternity pay. Hiring staff for the first time can be one of the most expensive elements of running a business, so bear this in mind when planning expansion.
9. Professional advice costs for startups - £££
When you’re setting up a business, it can be a huge help to have some business advice from those who have done it all before. Advice is invaluable as you embark upon your journey as a new entrepreneur, as you can learn from others’ mistakes to avoid making your own.
Professional advice for startups
Some areas where you may benefit from professional advice include:
accountancy / book-keeping
legislation (eg H&S, GDPR)
IT, systems and software
Mentoring for startups
Having a business mentor who has experience in your sector can be invaluable to new business owners. You may also be able to get mentoring via your finance provider. For example, everyone who takes out a Start Up Loan with Transmit Startups receives free mentoring from our network of business mentors.
Fund your startup costs with a Start Up Loan
Borrow from £500 to £25,000 to start your dream business with Transmit Startups. We provide government-backed Start Up Loans to pay for anything from marketing and manufacturing, to software and stock.