I don’t know what other people have told you, but running a business is never easy or cheap. Apart from the general administrative expenses, there are lots of hidden costs associated with starting and running a new business. Since you are paying for everything, you must figure them out. It’s pretty much like figuring out any hidden cost associated with the ESPN on Directv. If you don’t get familiar with these expenses, they will sneak up on you.

That’s not the only reasons you must keep track of these expenses. For a business owner, it’s always better to know things in advance. Money is the lifeblood of a business. If you know how much a task would cost, this can help you determine what’s doable and what’s not. You can also cut back on other expenses and take care of the costs that deserve the most attention.
So let’s scratch 5 of the common yet hidden costs of starting and running a business:

#1: Overhead Costs
Overhead costs include the ongoing business expenses whether a company is selling or not. It is the kind of expense that you can trace or identify with something. This expense, however, is critical to the operations of a business. You cannot really avoid overhead costs. If you don’t keep track of it, it will get in the way of the growth of your business as well as profit.

#2: Insurance
Starting out, you are going to need insurance (probably a lot of it). It is an undeniable cost that protects your business and the money you have invested from financial liabilities and lawsuits. As your business grows, so will the number of insurance policies. This includes general business insurance, liability insurance, property insurance, errors, and omissions insurance.
The type of policy you choose depends on the type of business, its size, industry, risk factors, location, etc. You might end up spending $1,000 or even more per policy annually. As you start, make sure you pick the insurances that are mandatory for your business.

#3: Legal Fees
You might haven’t thought about it but as you go down the road, a business has to bear legal fees. This could be your #1 hidden cost in some situations. Small businesses, in fact, are a common target of lawsuits. But lawyers understand that the business owners rarely litigate, they would rather go for a settlement. And these settlements can cost you between $5,000 and $1,000. Just in case you forgot, once a business settles for a lawsuit, the insurance premiums spike.

#4: Professional Fees Permits and Licenses
Even if you are not in any legal trouble, you still need to hire a lawyer to file taxes and set up an LLC. Then you are also required to apply for a license. All those can cost you a significant amount of money. If it’s a home office, you need a license, if you have a warehouse, you need a license. And once you have paid the license fee, you will have to bear a recurring fee every year plus a renewal fee. Licenses are not that expensive but permits are. Keeping track of both of them can be frustrating.

#5: Taxes
Lots of business owners don’t think much about taxes especially when they have come from a career where they were an employee. Of course, you paid your taxes but the payroll dept. of your company was responsible for it. Things are way different when it comes to paying taxes when you are a business owner.

Whether you are generating tons of income or not, you have to pay your taxes. Being your own boss has its own perks but you will have to spend extra time calculating your taxes. This tax covers your social security contributions as well as the payment of your Medicare. A portion of these contributions is handled by employers. In your case, you are the employer now. So, you will have to pay all of them by yourself. Depending on your net income, you will be taxed differently. And another thing; you must pay taxes whether you are generating any income or not.

Final Words
For new self-employed people, knowing such costs in advance is a blessing. However, apart from these costs, time is something that needs to be on the list too. You have to give a significant portion of your time doing administrative tasks rather than working something productive and this could turn out to be an expense. Imagine if you could save time searching “what channel is paramount on spectrum”. You could use those hours doing some real work like comparing prices and packages.