Why you should calculate start-up costs

Setting up a business has many costs and they can vary for each business.

Your start-up costs are the expenses you need to pay before your business generates an income. Understanding these costs can help you plan, seek finance and increase your chances of business success.

Create a start-up costs sheet

Use our template to help calculate your start-up costs.

Steps to calculate your start-up costs

1. Do market research

Before you start your business, do market research. This will help you make sure your product or service will be profitable. You need to gather information on your market, potential customers and costs of production.

Your research will help you identify and plan for some of the costs to start your business, such as staff or marketing costs.

2. Understand your start-up costs

Your start-up costs will depend on the type of business you're starting, your business structure and your industry.

Our template lists some expenses common to all business types, such as:

  • supplies and equipment
  • utility connections
  • insurance
  • business name registration
  • solicitor fees.

Consider your running costs

Running costs are the day-to-day expenses associated with operating your business. It's the amount of money you will regularly spend on things such as wages, rent and buying stock.

It's a good idea to make sure you'll be able to cover 6 months or more of running costs when you start a business.

Identify your assets

Listing your assets and expenses separately is good practice when starting a business.

An asset is any item of value that your company owns. They can be:

  • physical items such as vehicles, computers and office furniture
  • intangible items such as intellectual property.

You can claim business expenses and some depreciating assets as tax deductions.

3. Add up your costs

Once you have your list of costs, enter them into your start-up costs sheet. It'll calculate your total costs for you.

If you’re using estimated costs, label them clearly and state whether your figures include or exclude goods and services tax (GST).

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