Disclosure: I’m not an accountant or attorney. All this is from my own experience and my own research. There are a couple of affiliate links in this post but you aren’t required to go through those links if you don’t want to. What is posted here is valid as of the time of writing and could change at anytime in the future. If you are going to run a business I encourage you to talk to an accountant to make sure you do things right.
There are people want to run a business and they think it’s easy, and it won’t cost them anything. Well both of those thinking are wrong. Running a business isn’t easy and it does cost money. I’m going to run through approximately how much money it will cost to run your business, I’m going to also pretend you are based in Ontario, Canada (so please do your own research if you are based somewhere else in the world).
Businesses need a name, if you want to use your own name you don’t need to register for a business license, but if you want to use another name you need to register for a business license. If you do this on your own it can cost anywhere from $8 to $26 for each search that you do (to see if any other companies have a similar business name), and $60 to register the business (which is valid for 5 years). Then after 5 years if you want to keep having a business name you need to renew, which is another $60.
The business may also need permits or licenses depending on the business, the fees for this aren’t publicly post but I encourage you to go to BizPaL to see what permits or licenses your business needs.
Bank account. You can’t use your personal account as the same account for your business, there are many ways and reasons why you need a business bank account and it’s better in the long-term to save yourself the trouble and just get a business bank account from the start. Those bank accounts aren’t free (some of them may be free but the bank can start to charge money at anytime) so do your own research.
The business also needs a website, you can’t rely on social media sites to promote your business so you need to pay for a website. A .ca domain is about $13 per year (affiliate link) and good website hosting is about $180 per year (affiliate link).
Every year you will need to do send in your business income and HST from the previous year, now you can use a site like SimpleTax where you can do that for free but if you don’t want to spend the time doing it then you will have to pay an accountant (fees vary based on the company you use and your situation).
Your business may also need some sort of accounting software to ensure you can easily send in your previous years business income (and HST). There are so many different companies doing this type of software (like Quickbooks (affiliate link)) that you should use what works for you (if you are unsure you can use a site like alternativeto to see what is out there.
To total this all up, if you do one business name search (let’s say $26), then register that business name ($60), then the fees for a bank accounts (let’s say $5 per month, so $60 for a year), then you need a website (so about $193 for a year), then an accountant (let’s say $450 for just doing your taxes and submitting them at the end of the year), then the accounting software fees (let’s say you chose Quickbooks which for the smallest plan is $20 per month, so $240 for a year). All together that’s $1,029 just for one year.
Now you don’t need to do a business name search or register after that first year, and you don’t need a monthly fee for a bank account (which do exist, based on my research you will need to go to a credit union to get this). Which takes some money off but it still isn’t cheap to run a business, sure you could go cheaper but then you sacrifice your business (with a cheaper website it may go down more often, and if you get a cheaper accountant or cheaper accounting software it may not be worth the head-ache) and it could end up costing more in the long-term.
All this is just for a business that doesn’t need to go anywhere, I didn’t include the cost of driving (or public transit), or the cost of advertising, or the cost of equipment, or the cost of going to events, or really anything else related to your specific business. It’s not easy or cheap to run a business, but does give you a good experience on what it’s really like to run a business.
I’m publishing this as part of 100 Days To Offload. I won’t be posting everyday but you can join in yourself by learning more and visiting https://100daystooffload.com/.