Money is kinda important

Hidden costs of setting up a business

Starting a business is exciting, whether you do it alone or with a group of like-minded people sharing your vision. But amongst all of the excitement and optimism there needs to be a heavy dose of reality when it comes to the costs that can make or break a start up business.

Legal costs

When starting up a business there are also legal costs to consider.

Making sure your business is a legal entity from the start can give you extra protection. If your business is not set up and structured the correct way, you may have to wait for approvals and permits during vital stages of business development.

Your personal assets will need protecting. According to Crest Legal you will want to be advised by an experienced lawyer on how best to protect your personal assets and the legal consequences of key contracts. You will want your business to be appropriately structured to protect your own personal, non-business assets.

You will want to carefully consider any contracts that you sign on a personal basis, such as personal guarantees.


You have various pre-launch costs including researching audiences and development of products as well as advertising costs such as sales and marketing.


The covid-19 pandemic has brought about big changes in the way businesses and organisations work. The idea of a fixed location is gradually becoming a thing of the past. However, office space and utilities are still a big consideration. 

How much space do you need and what do you do if you start to grow? You’ll need equipment, not just the day-to-day activities such as laptops and other office equipment, but also the requirements around research and development.


Not only do employees need paying but they also needs benefits such as medical leave health insurance training costs and other benefits. You may also office perks that help creative culture where they feel wanted and don’t look at your competitors.

According to it can cost up to 1/5th of a salary to replace a departing employee.

Employment contracts

Having the appropriate employment contracts in place can help you should you face a legal challenge from a former employee or a partner. Partnership agreements can help protect you and your assets.

Insurance cover, employer liability and public liability are always a good idea. If you’re providing services such as advise or consultancy then you may also consider professional indemnity insurance.

Payment issues

You may provide a service that is fulfilled but you haven’t received payment where the customers forgets or the bank has issues. Holidays can also cause problems with payments which can hurt your bottom line, particularly when you have expenses to cover. 

Setting payment terms with clients is a great idea. Once the invoice is issued, they have a set limit to pay the invoice. Alternatively you can encourage the setting up of direct debit payments and bank transfers.

Categories: insurance, legal

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