The Hidden Costs of Starting A Small Business in 2025

Starting a small business costs more than most people think. While expenses on inventory and marketing are expected, aspiring entrepreneurs often forget to include hidden costs, such as licensing fees, administrative charges, and other expenditures, in their budgets.

These hidden expenses can quickly add up and strain your startup budget. So, to help you prepare, we’ll explore the hidden costs of starting a small business in this comprehensive guide.  

Below, we’ll list startup expenses you may have overlooked and enumerate the different small business grants you can use to fund them.

Keep reading to discover how much it costs to start a business in 2025.

10 Hidden Costs of Starting a Small Business

If you plan on launching a new venture this year, here are 10 hidden expenses you must consider.

Permits & Licenses

Business permits and licenses are vital for launching a new venture. Depending on the nature of your business, you may have to obtain multiple permits and licenses, some of which must be renewed annually.

Permit and licensing fees differ from state to state, so we recommend you consult your state’s secretary to determine their true cost.

Administrative Fees

Incorporating a small business involves administrative fees, such as filing and annual fees. Depending on the entity type and its formation state, these charges can range from as low as $50 to $520.

You may also have to pay additional charges if you hire professional registered agent services. Registered agents are a requirement in most states. You must designate one to register your business. 

Insurance

Insurance is another crucial expense that new business owners often overlook. Policies protect small businesses from financial losses caused by unexpected events such as accidents and lawsuits.

Most states require businesses to have workers’ compensation insurance, while some industries require more comprehensive coverage.

For instance, companies in the construction and manufacturing industry must have product liability insurance covering defective product claims. Meanwhile, service-based businesses like consulting firms must obtain professional liability insurance for negligence claims.

The cost of business insurance varies depending on its coverage. However, the average rate for small business insurance policies is $57 per month or $684 annually.

Consultant Fees

Consultant fees are the overhead charges you pay when you hire professionals like accountants, tax preparers, business specialists, or legal advisors to help you set up your small business.

These professionals will ensure your venture complies with federal and state regulations and help you streamline your operations.

While hiring a consultant is not mandatory, they can give you invaluable advice on maximizing your profits.

Rent & Utilities

If you want to open a physical store, you need to allot money for your rent and utilities.

The average cost of commercial space in the US varies depending on location and property type. As of this writing, retail spaces cost around $23 per square foot, while industrial spaces cost around $8 per square foot.

However, rent is just one part of the equation. You must also account for your utilities, such as electricity, water, phone, and internet. On average, utility costs in commercial buildings run about $2.10 per square foot. 

This means the bigger your space is, the more expensive your utilities will be.

Office Equipment

Beyond heavy machinery, your business will also need basic office equipment, like computers, printers, and papers, for its daily operations. It may also need software, such as HR and accounting software, to manage your business’s finances.

While forgetting these smaller items may seem minor, these expenses will add up and cost you more over time.

Employee Benefits

Hiring employees means paying for benefits like health insurance, retirement contributions, and paid time off. These benefits are mandatory, and failure to provide them could result in penalties, so you must include these expenses in your budget.

Credit Card Fees

Payment processors, including Visa and Mastercard, typically charge vendor fees for credit card transactions, which are roughly 3% of the total sale. These charges can be quite a burden for smaller businesses with low or tight profit margins.

Website Development

A professional website is essential to your small business’s success. It’s the key to building credibility and attracting customers in today’s digital world. However, creating and maintaining websites comes at a cost.

The average cost of a professional website ranges from $1,000 to $5,000. This estimate includes charges for web design, maintenance, and marketing services.

Taxes

The final hidden cost of starting a small business is taxes. Depending on which state your small business is and how it’s structured, it may incur different types of taxes, including sales, income, payroll, and self-employment taxes.

The rates for these tax types vary by state and can quickly pile up, so we recommend you include whichever applies to your business in your startup budget.

Remember, you won’t make money immediately, so you must allocate your funding properly.

Plan Smart & Start Strong

Starting a new venture is indeed a major milestone for any aspiring entrepreneur. However, if you’re unaware of how much it costs to start a small business, you may face financial strain before it gets off the ground.

The key here is thoughtful planning and strategic budgeting. By identifying potential expenses, including hidden costs, you can create a realistic budget for your startup. This proactive approach to business formation allows you to allocate your resources wisely and helps you assess whether your business needs additional funding.

If your working capital falls short, you can always seek funding with NCH’s help!

NCH specializes in business formation. Our team of experts will help you establish your business and guide you in securing the funding needed to turn your entrepreneurial dreams into reality.

We’ll help you file your formation documents and find the right grants for your small business.

Ready to take the first step? Contact NCH today, and let us help you start strong this 2025!

To learn more about our business formation services, visit our website here or call us at 1-800-508-1729 to schedule a free consultation about launching your startup.