Few things embody the American spirit more than starting a business and embarking on an entrepreneurial journey. It’s one of the most exciting and worthwhile things someone can do, but it also comes with its own set of challenges. For startup founders, one of the most common pitfalls is failing to understand and effectively manage costs, and understandably so, as there are many expenses to account for when trying to get a new business off the ground.

For your startup to achieve the stability required to succeed, it is vital to have a comprehensive grasp of the expenses involved in launching and sustaining it. Here, we will provide a checklist that outlines the essential costs involved in establishing a US startup, so that you can plan effectively and ensure that your pathway to success is as smooth as possible.

1. Legal Costs and LLC Formation

One of the most important steps in starting a new business is establishing your organization as a legal entity for tax and liability purposes. One of the main ways to do this is to form a Limited Liability Company, as this enables a degree of flexibility and protection against personal liability.

There are a variety of different elements that will make up your total LLC cost. With filing fees, DBA fees, publication, agents, and more to account for, the cost of forming an LLC can be anywhere from several hundred dollars to several thousand dollars. Of course, this will also depend on your industry and the part of the US where you want to establish your company, so it’s worth doing some initial due diligence here.

2. Licensing and Permits

Setting up a new business will also mean getting the relevant licenses and permits needed to operate in your state. General business operation licenses are typically a standard, and depending on the nature of your business, you may require more niche permits in order to sell specific products or provide certain services. This is especially true for the US, since each state is likely to have state-specific requirements you need to be fully compliant with. It would be true to say that, for example, that registering an LLC in North Carolina is significantly different than registering an LLC in South Carolina.

Again, the specific costs can vary by state as well as the exact permits you require. Fees for business operation licenses are often nominal – around $100 in many states – but in cases where further regulatory approvals are required, costs may be more substantial.

3. Insurance

Before going out and achieving success with your new business, it’s important to put insurance in place and make sure that your interests are protected against unexpected events. Depending on the industry of your company, you may need different types of policies, such as general liability, professional liability, workers’ compensation, and cyber liability insurance, to name just a few. In some cases, using a free VPN for basic cybersecurity protection might seem appealing, but serious startups should invest in stronger insurance and security measures from the start.

The cost of your insurance premiums will naturally depend on the coverage you require, the risk profile of your business, as well as your industry, and the specific broker you choose. Premiums can range from the hundreds to the thousands, and discrepancies between vendors can be considerable, so it’s worth getting quotes from several different brokers before making a choice.

4. Office Space and Utilities

Your startup’s physical premises and location can also play a crucial role in its operation and eventual success, but it is also one of the most significant expenditures to consider. Depending on where you operate, prices can vary dramatically, both in terms of rentals and sales. Given the dynamic and sometimes volatile nature of start-up business, most new companies opt to lease an office space, which can cost thousands per month, depending on the size of the premises and its proximity to major commercial centers.

In addition to the cost of the actual premises, it’s important to factor in the cost of utilities, including electricity, water, refuse, and phone and internet services. While these might seem fairly inconsequential outlays in comparison to that of the premises itself, they can quickly add up. Budgeting for initial deposits and bills like these is essential to ensuring that your startup doesn’t suddenly find itself creaking under the burden of basic running costs.

5. Marketing and Advertising

As the adage goes, you have to speculate to accumulate, and it’s especially true when it comes to building a reputation for your brand. Marketing and advertising services can certainly help you to build buzz around your company, but they also often require considerable investment before yielding meaningful returns in terms of consumer engagement and revenue.

Depending on the nature of your business and its target demographics, you might need any of a range of different services, from social media and digital marketing, email marketing campaigns, and pay-per-click advertising to traditional advertising methods that rely on print and broadcast media — all while navigating an increasingly competitive digital landscape.

Before embarking on your business journey, it’s smart to first assess the scale and scope of your marketing ambitions and set goals and timelines for what you want to achieve. This will allow you to decide which exact services you will need so that you can get quotes, forecast expenditures, and budget appropriately.

6. Human Resources and Payroll

Assuming that your startup is not a one-person operation, there will also be HR and payroll costs to consider. This will include salaries, payroll taxes, and any potential benefits or training expenses for employees. Investing early on in HR software and a solid payroll system — ideally with built-in two factor authentication to protect sensitive employee data — will help you to streamline operations and keep track of these expenses effectively.

Conclusion

Launching a startup in the US is an exciting adventure in many ways, but it’s important to balance ambition with pragmatism in the form of careful financial planning and management. By understanding and forecasting the costs in this checklist, you can be better prepared for what lies ahead and create a detailed strategy for success. With due diligence and thoughtful financial planning, your startup can not only survive but thrive in the competitive business landscape of modern America.