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How Much Does it Cost to Start a Business Online?

05/05/2022 08:06:45 +0000
If you plan to start an online business, there are many considerations.
 
But, of course, likely the most important is how much it will cost you to start an online business. However, as the saying goes, you need to spend money to make money.

This is true whether you are starting an online business or a business with a physical storefront.
 
This article discusses the costs of starting and operating an online business. So, how much does it cost?
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You will be able to create a solid budget with the list below and determine how much money you will need to spend. If we add everything up right now, you can expect to pay as little as $2,000 and $25,000 if you go the high-end route.

Payroll

Many people do not consider payroll when starting an online business. Simply put, you need to earn a living wage. Most recommend that you be financially stable before starting any kind of business. You should be able to pay at least one year's worth of bills with the money that you have saved up.

However, this is not always possible because saving money today has become extremely difficult. Therefore, estimate how much you will need to pay yourself from your new online business to survive.
 
Calculate how much money you will need per month. Examples include childcare costs, utility costs, rent or mortgage payments, taxes, insurance, vehicle payments, credit card payments, debt, entertainment costs, groceries, clothing, etc.

If you hire a team of people, you need to consider how much you will pay them. In fact, payroll is generally considered one of the largest startup costs for any business.
 
According to some studies, this can make up 25% and 50% of your total budget.
Hiring freelancers to work for you is a good option. You can expect to pay up to $0.25 per word for content or $25 to even $300 per hour for freelance designers. Web programming and web development could cost between $30 and $150 per hour.

Office Supplies

We are talking about setting up an online business in your home. However, this doesn't mean that you don't need supplies. You'll need a desk, a chair, a laptop and maybe a printer. In addition, you're going to need a desktop with a monitor, so you can expect to spend up to $1,500.
 
A laptop will run up to $1,500, and a printer/scanner will cost around $200. Then, for software subscriptions, such as for Microsoft Excel and Microsoft Word, and a point of sale program subscription, you might pay between $100 and $300 per year.
 
Moreover, you can expect to spend about $100 per year on security programs that will keep data on your computer safe. Then, you will likely pay $200 to $300 for a good desk, between $50 and $200 for a good chair, and about $50 for a filing cabinet

Web Presence & Marketing + Social Media Accounts

Marketing your products or services is crucial. This means you need to develop a good web presence. This can be one of the highest costs incurred by a new online business in many cases.

In the beginning, you can go the DIY route. You can use your personal network by calling and contacting people you know and even using social media. However, you don't want to spam or annoy people, so this will only go so far. You will therefore want to engage in content marketing.
 
There are many different types of marketing you can use. As mentioned above, content creation is a big one. Refer to the rates for freelancers that we discussed above for average costs.
 
You can also hire social media influencers to post pieces that promote your business. For smaller influencers, expect to spend around $25 per post. However, for extremely popular influencers, you might pay several thousand dollars. However, social media, which is often free, is another option.

Another option would be to use something like Google ads, which can cost between $1 and $2 per click on the search network. Of course, using paid advertisements can vary significantly in terms of cost depending on who you are advertising with.
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Your Website + Web Hosting

Your website will be your storefront, so this is a pretty significant cost to incur. If you are making an extremely basic website using templates, you could spend as little as $100. However, for a professional or modified template, you could spend between $1,000 and $3,000.
 
Moreover, if you want to create a fully functional website and get somebody else to do it, you could spend as much as $10,000. So creating a good-looking and fully functional website will be one of your biggest expenses in the beginning.
 
Of course, if you have experience building websites and coding, it will be much more affordable than hiring professionals.
 
For instance, you can set up a fairly basic Shopify site for as little as $29 per month.
In addition, you will have to pay for website hosting—you can't put the website online without having a host.
 
You can expect to spend at least $10 per month on a website host. However, depending on the host, quality, and features you pay for, you could spend $100 per month or more.

Various Fees and Licenses

You also need to account for various taxes, fees, and licenses you will have to pay. For example, if you are self-employed, you will have self-employment taxes. This could be between 10% and 30% of your total income, depending on where you live.
 
Also, remember that you will need to pay taxes quarterly and pay taxes on your business's profits. In addition, you will likely need to pay various other taxes, including unemployment, workers' compensation, and payroll taxes. Again, these taxes will depend on where you live.

Also, be aware that you will have to pay processing fees, and the amount will depend on your payment processor; however, you can expect to spend anywhere between 0.5% and 2% on processing fees. For instance, when financial transactions are made through PayPal, they often take $0.30 from the transaction and another 2.9%.

You will also need permits and licenses, depending on where you live. However, we can't estimate this, as it will depend on your business type and where you live.
About the Host
Sophie Howard is the founder of Aspiring Entrepreneurs, a community designed to help people develop the skills and confidence to build a business and a life that serves them. Sophie began online in 2013 with an Amazon firm, which she sold for more than $1 million in 2015.

Sophie has lectured on stages all around the world, encouraging and teaching other ambitious entrepreneurs. She has established instructional programs educating thousands of students how to sell online, in addition to releasing over 1000 products.

Sophie has also written a book titled "Aspiring Entrepreneurs: A Guide to Finding Your Best Path to Financial Freedom."
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