Five secret costs you need to know before launch your Startup



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After listening to hundreds of startup success stories, young entrepreneurs might think that building a billion-dollar enterprise is not such a hard thing to do. Do you have a great business idea? Good for you, but that’s just a foundation, and you still need to build strong business structures that will support your future empire.

At the very beginning of your entrepreneurship career, you’ll discover many hidden costs that lurk behind every startup launch. In this article, I’ll present you with some of these costs and explain why they are crucial for your company’s good start.

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Table of Contents

Surety bonds

If you decide to launch any type of service business, you’ll probably need to buy a license surety bond. This bond protects your future customers from any type of damages that might be associated with your business. You can buy these bonds from surety companies.

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They will assess your credit history, as well as your corporate and private assets and provide you with a unique bond price that usually ranges from one to several hundred dollars (depending on the bond’s value and the business industry you’re in).

Although most entrepreneurs view these bonds as an unwanted necessity or a necessary step in the licensing process, surety bonds can benefit your future company in many different ways. They protect your reputation and can quickly solve any type of customer damage claim.

Business insurance

A surety bond will protect your customers, but you also need a guarantee that your company won’t suffer from damages caused by mishaps, natural disasters, fraudulent acts and customer and employee lawsuits. Your business operation will be safe with buying these business insurance policies:

  • Professional liability insurance (errors and omissions)- protects you from negligence claims due to harm that resulted from employee mistakes and failures to perform;
  • Property insurance- covers your office building and all the equipment, inventory and furniture that’s stored inside. It protects your company’s assets in an event of a fire, natural disaster, flooding, and theft.
  • Workers’ compensation insurance- is an obligatory insurance policy, which covers medical treatment and workers’ benefits in case of work-related injuries.
  • Product liability insurance- protects your business operation from damages caused by product failures.
  • Business interruption insurance- protects you from losses caused by unintentional business interruption.


Profits are usually very limited in the first few years of business development. During this time most entrepreneurs reinvest their profits in order to spread their business operation, but they still need to pay taxes. Even the sole proprietors need to pay 8% of their gross-income to Uncle Sam, while limited liability companies (LLC) pay $800 per year, even if they don’t gain any revenue.

Licensing fees

Buying a license surety bond is just one step towards getting a business license. You’ll also need to pay a license fee to the state licensing authority. The price usually depends on: physical location of your enterprise, federal and state industry regulations and the type of structure you choose to incorporate.

When it comes to licensing, many entrepreneurs change their residence in order to incorporate their business in a city/county/state that charges lower licensing fees.

Professional help

Incorporating a new company requires you to fill out tons of forms and make difficult choices that will have a huge impact on your business development. That is why you need to hire an attorney, who will help you with paperwork and give you a bit of useful advice if you get stuck in a dead-end.

Attorney fees are not cheap, but that’s the only way to securely incorporate your business, protect your future company and avoid legal and taxation issues.

Although launching a startup is not as easy as some ‘happy go lucky’ entrepreneurs like to point out, it is still a much better career alternative to 9 to 5 jobs.

Maybe your company’s profits won’t match your corporate salary at the beginning of your entrepreneurship career, but if you invest some time and effort into your business operation, you’ll quickly turn your startup into a highly-profitable enterprise.

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Oscar Waterworth
Oscar Waterworth
Oscar is a writer and one of the editors atBizzmarkblog. He enjoys doing research and writing about the latest in the business, technology and marketing industries. Follow Oscar on Twitter to stay updated d with his latest posts.

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