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The Cost of Opening a Business: How Much Business Can You Afford?Did you pass the personality test? Great! So, what is the cost of opening a business? Depending on HOW you want to start, you may not need as much as you think.Your finances will determine whether you build your own tutoring service or purchase a franchise. But before we look at costs, let's look at your finances in general. The Cost of Opening a BusinessHow are you financially? How much debt do you already have? What's your credit score? Savings? What savings? Other sources of income? Do you have access to lines of credit? How much money should you plan on laying out at the start? How long will it take you to become profitable?When calculating the cost of opening a business, there are always unexpected costs. So whatever estimates you come up with, make them as conservative as possible…and expect the unexpected. Whatever you do, make sure you're financially ready. Remember you can initially reduce the cost of opening a business by starting part time. If you need to raise extra money to become financially viable, start small. Keep your day job for now, and make sure you don't get in over your head.A great resource for people starting a small business is the Small Business Administration (SBA). They offer online and off line courses and work with banks to offer low interest loans. To find an SBA office near you, look under the "local resources" section of the SBA website and click "district offices". While you're on the SBA site, be sure to browse through the "small business planner" for information on business plans and check the "services" for other services offered by the SBA. This is a nice primer site for people new to the small business world. The SBA is a one stop shop for people starting a new business and are looking for some initial guidance. Don't Forget Uncle SamRemember to count your tax liability when you calculate the cost of opening a business. Check online with the Internal Revenue Service (IRS) to keep yourself on track for your taxes.One mistake many people make when calculating the cost to open a business, is not calculating and paying their quarterly estimated taxes. Your tax liability, is like any other “cost” of doing business. When you're self employed, your tax payment schedule is different than being an employee. And when your tutoring service begins to flourish, it's easy to lose track of the money...both income and expenses. The self-employed pay estimated taxes on a quarterly basis. This means that you will pay an estimate of your tax obligation (using Form 1040-ES) four times yearly (on April 15, June 15, September 15, and January 15). The instructions for the Form 1040-ES gives details on how to calculate your estimated taxes. Be sure to read all instructions. And remember, whether you're a one person tutoring service, or you work as an independent contractor for a major tutoring franchise, the money you make is self employed income. Also, if you decide to incorporate your tutoring business or become a LLC or Partnership, you'll need to go to the IRS site to find the proper forms for taxes. DO NOT cheat Uncle Sam. He will find out. This will cause you and your tutoring business pain. OK? When you're starting a small business, it's hard to keep it afloat when the IRS is chasing you down. It's always best to pay your estimated taxes on time to avoid penalties, interest and headaches. Don't get behind, it's hard to get caught up. If the money you make tutoring can pay your expenses, but not pay your taxes, you really aren't being "profitable" are you? If you aren't honest with yourself here, it becomes a slippery slope when your taxes come due, and the tutoring till is dry. So, do you have a good grasp of what the cost to open a business will be? Still interested in starting a small business? Great, lets move forward. Return from Costof Opening a Business to TutorTrend Home Page
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