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Accounting Money

Costs That Many First Time Business Owners Overlook

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Nowadays, increasing numbers of people are looking into running their own business. This isn’t all too surprising. In general, people are growing tired of working long hours in fields of specialism they’re not all too interested in, in order to earn someone else’s fortune on their behalf. Instead, people would rather place themselves at the top of the pecking order, choose what field they operate in and keep the majority of profits earned by setting up their own company.

But it’s important to remember that running a small business is by no means a cheap task. You’re going to have to invest money into a lot of different areas in order to keep your company up and running, to entice customers and to generate sales. Some of these costs are obvious – the costs of setting up a website, the cost of recruiting staff, the cost of advertising and marketing products. But there are many costs that are frequently overlooked. It’s important that you incorporate these costs into your planning process so that you’re not faced with trouble or an insufficient budget down the line. Here are a few to be aware of!

Incorporation Costs

Setting up an incorporated company ensures that your business is a separate legal entity to you as an individual. Incorporating your company is also commonly referred to as company formation, company registration or forming a limited company. Put simply, doing this will make sure that all money, property, assets responsibilities and agreements purchased by, owned by, or agreed by your company are legally separate from your own finances and your own belongings. If your company faces trouble down the line, your own possessions and assets won’t be repossessed to cover the costs and your own financial record won’t be tarnished. This, of course, is more than worth focusing on. But it doesn’t come for free. There are costs to company incorporation – mainly using the services of a lawyer who will be able to take care of the legal parts of the process for you.

Unplanned Downtime

The current world situation has made us realize that companies can experience a lot of downtime due to unexpected circumstances. Over the past four months, a huge number of companies around the world have had to stop operations in order to slow the spread of coronavirus. Those that are insured against circumstances like this are some of the few that have managed to survive. There are also other more common instances of unplanned downtime that you should be prepared for too.

Making sure that you are tracking downtime in any area, such as tracking unplanned industrial downtime, can help you to understand how often downtime occurs, what commonly causes it and what you can do to prevent the losses resulting from it. However, no matter how hard you try or what preventative measures you put in place, some instances of downtime are unavoidable. Downtime can cost a whole lot of money and you need to account for it in your budget if certain instances are an inevitable part of your business process.

Business Insurance

Many of us take out insurance in our day to day personal lives to protect our belongings or protect our futures financially. We take out home insurance, contents insurance, car insurance, pet insurance, life insurance and more. Insurance is also an important aspect of running and protecting your business. There are all sorts of different insurance policies and plans out there that you really should pay a premium for. They could save you a lot of money down the line if something goes wrong. Here are some to take into consideration.

  • Commercial Premises Insurance – your commercial premises faces the same risks as any other property. These could include theft, fire and flooding. Insuring your property against threats like these can prevent you having to fork out for repairs and replacements if something does go wrong.
  • Gadget Insurance – most companies now rely on tech to get by. But tech can be stolen, lost, broken or damaged easily. Gadget insurance can ensure that a replacement is sent out quickly to prevent any company downtime.
  • Indemnity Insurance – if your company offers clients or customers any advice, you need indemnity insurance. This will protect you against the costs of legal action if anyone takes you to court over advice that you have given.

These are just a few costs that you may have overlooked in your business planning and budgeting. Make sure to incorporate them into your process and to account for their costs to avoid any surprises as your business progresses!

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