1. What Are Start Up Costs for a Business?
Start up costs are the initial expenses you incur when launching a new business. They include everything needed to start trading—from equipment and licences to branding and stock.
2. Common Start Up Costs Categories
- Premises and utilities
- Equipment and tools
- Licensing and legal fees
- Marketing and website
- Stock or raw materials
- Staff and training
- Insurance and professional fees
- Working capital buffer
3. How Much Do Start Up Costs Typically Total?
The amount varies by business type:
- Home-based or online business: £1,000–£5,000
- Service-based small business: £3,000–£10,000
- Retail or hospitality business: £20,000–£100,000+
- Manufacturing business: £50,000–£250,000+
Always build in a 10–20% contingency for unexpected costs.
4. Premises Costs
- Rent deposit and advance: £2,000–£10,000+
- Renovations or fit-out: £5,000–£50,000
- Utilities setup and deposits: £300–£1,500
- Furniture and fixtures: £1,000–£10,000
5. Equipment and Technology
- Computers and software: £500–£5,000
- Point of Sale (POS) systems: £300–£2,000
- Specialist tools or machinery: £1,000–£50,000 depending on sector
- Mobile or communication tools: £100–£500
6. Licences and Legal Costs
- Business registration (Companies House): £12–£100
- Food or alcohol licences: £100–£1,900
- Planning permission or inspections: £100–£1,000
- Legal advice and contracts: £300–£2,000
7. Marketing and Branding
- Logo and branding: £200–£1,000
- Website and domain: £500–£3,000
- Launch marketing campaigns: £300–£2,000
- Business cards, signage, menus: £100–£1,000
8. Stock and Supplies
- First batch of inventory or materials: £1,000–£10,000
- Packaging and delivery materials: £200–£1,500
- Stationery and cleaning supplies: £100–£500
9. Insurance and Professional Services
- Business insurance: £300–£1,000 annually
- Accountancy and bookkeeping: £500–£2,000
- Mentoring or consultancy: £100–£1,000
10. Staffing and HR Setup
- Recruitment costs: £0–£1,000
- Initial wages buffer (1–3 months): £5,000–£15,000
- Training and onboarding: £200–£1,000
11. Working Capital
Always set aside 3–6 months of expenses to cover:
- Rent
- Wages
- Stock
- Utilities
- Loan repayments
This cushion helps maintain cash flow until the business stabilises.
Frequently Asked Questions
What’s the cheapest business to start?
Online or freelance services—copywriting, virtual assistance, digital marketing—can start under £1,000.
Can I get a grant to cover start up costs?
Yes. Government and local grants are available for eligible industries, young entrepreneurs, or social enterprises.
Do I need to budget for tax from day one?
Yes. Even if you don’t pay immediately, you should plan for corporation tax, VAT, and National Insurance.
Is it better to rent or buy equipment?
Renting lowers upfront costs but may be more expensive long term. Buying suits long-term use and reliability.
How do I track all my start up expenses?
Use simple accounting software like QuickBooks, Xero, or spreadsheets to stay organised and HMRC-compliant.
Are all start up costs tax deductible?
Most are. Include them in your initial accounts for potential tax relief—check with an accountant.
Conclusion
Planning for start up costs for a business is one of the smartest steps you can take. By understanding your needs, estimating realistically, and setting aside working capital, you position your business for stability and success. Always track costs, seek funding where possible, and stay lean in the early stages.