Don’t let hidden costs derail business plans

Steven Garibell
Steven Garibell is vice president of LGBTQ2+ Business Development at TD Bank.
TD Bank

Building Dreams | Navigating your business Ambitions

Owning a business involves an endless expense stream: inventory, office rent, employee salaries and more. But starting your own enterprise may include unanticipated costs that can quickly put a dent in cash flow if not properly managed. Among the most overlooked expenses:

  1. Business licenses and permits – Proper licensing and permitting, especially in New York City, are essential one-time or annual costs for keeping your doors open. Some fields require professional designations, while others could have additional expenditures to set up a legal structure (LLC, S-Corp) to protect the business.
  2. Self-employment taxes – Many entrepreneurs owe an annual self-employment tax payment. Others can incur taxes if employee withholdings were not properly calculated, or deductions were overlooked or misapplied. This isn’t the time to do it alone – consult a licensed tax professional to prevent missteps.
  3. Professional fees – Owners quickly can become burdened if they take on all operational duties and tasks like payroll. Finding lower-cost alternatives is possible: consulting your bank is free, while using bookkeeping software and online banking tools can offer cash flow insights.
  4. Continued learning – “Learning on the job” is essential but expanding industry knowledge usually involves more formal training. These costs have a wide range from attending conferences to purchasing business resource books.
  5. Bad credit score – Carrying a poor credit score could be costly when you want to expand. A business credit score is typically used — along with debt-to-income ratios — to make lending decisions. Your personal credit score also comprises a large portion of your business score, so missteps in personal finances could cost your business.

Entrepreneurship can be expensive, but plans don’t have to be derailed by unanticipated costs. A little research and preparation can help owners manage revenue while starting out or growing the business.