How much does it cost to start a business in Australia?
The cost can vary widely depending on the type of business and size. For example, a sole trader working from home will have different costs compared to a retail shop or a manufacturing business.
It’s not just the upfront costs you need to think about either. Ongoing running costs play a big part in a business’s cash flow. According to the Australian Government’s guidelines, you should plan for at least six months of running costs when launching your business. This buffer lets you to operate smoothly, even if revenue takes time to ramp up.
5 common startup business costs
1. Supplies and equipment
Most businesses need supplies and equipment to function. And they’re some of the first costs you’ll encounter regardless of the business you’re starting. These startup costs can also include stock, tools, a vehicle, or technology like a laptop or payment system.
2. Utilities
When starting a business, you’ll likely face utility costs. These can be ongoing costs like electricity, gas, water, phone, or internet services. But keep in mind some of these may have connection fees or other upfront costs. While these may seem like relatively minor expenses, they add up quickly and need to be added to your budget.
3. Security deposit
If your business requires a premises such as an office or retail space, you’ll need to account for a security deposit along with ongoing rent. Bonds and security deposits for leasing a commercial space are often required upfront. Depending on the location and size of the property, these can be a significant part of your startup costs.
4. Business administration
Business administration expenses can include one-off costs like business registration fees, licensing, and permits. Depending on the nature of your business, there may be other costs for specialised licenses or industry-specific requirements. Business insurance is also an important addition not to be overlooked.
5. Legal fees
Legal fees are another expense to consider. If your business is a partnership or company, you’ll need a solicitor to draft documents such as business agreements, contracts, and terms of service.
Proper legal documentation can protect you from future liabilities and ensure compliance with Australian law, so this is an area worth investing in early.
The hidden cost of doing business
One resource new small business owners often underestimate is how much time goes into running a successful business. For many, they’re on their own, responsible for every aspect of their business.
Time spent on your business is essential. But go into your new venture with your eyes wide open. Chances are there’ll be some sacrifices you’ll need to make along the way.
The idea of going out on your own is exciting. But once you’ve come down from the clouds, get your head in the game to improve your chances of running a winning business.
Organise your startup business costs with Business+
We’ve touched on the ongoing running costs of your new business - rent, insurance, utilities and services, marketing and advertising, the list goes on. Unless you’re organised from the very beginning, expenses can be overlooked, especially if you’re using a personal bank account for business purposes.
To avoid this, open a dedicated business bank account for operational expenses and another for tax payments. This can help you stay organised and ensure you’re prepared to meet your financial obligations as they arise.
Our Business+ Account and Business+ Saver have no monthly account fees so you can open as many accounts as you need without increasing the cost of doing business.
Take your time to list every possible expense you’ll face when starting your business. Our startup costs calculator and checklist for starting a business can help.
Remember to check out our Business Hub. You’ll find heaps of free resources and plenty of helpful information to keep your business humming.
