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The Hidden Costs of Running a Home-Based Business

home business costs
By Kevin Conner

Starting a home-based business can be a great endeavor that changes your life for the better, but setup can be a massive effort that will require proper planning, some investment, and a lot of your time.

Part of that is budgeting and determining your costs, and we know you’re doing your research. That being said, there are some hidden costs that you might not immediately consider. In this article, we want to point out some of the most common hidden costs you should be planning for sooner or later, so a minor issue doesn’t become a business-breaking dilemma.

Home Office Space

You’ve probably already factored this cost in, but what level of dedication have you already put into it? Do you have a clean, clear and well-lit room to work in, or a corner of a living room where you are prone to distractions? We promise that you won’t be able to easily bear with the latter for too long, at least not in a way that allows you to live up to your potential.

If you’re going to be spending five to six hours a day at a workstation, you’re going to want to make sure that station is one you’re happy with and not something you’re just tolerating for a while. A good space can increase your productivity, put you in a better mood, and keep you comfortable. All these factors will be vital in the success of your business, as you and your health (mental and physical) are the most important assets of your business.

Additionally, if your business involves physical products, you’re going to need to store them somewhere. You might have some space tucked away in the garage for now, but with success comes a demand for a greater inventory. You should also plan for that potential cost ahead of time.

Various Online Services

A home-based business means that the internet will be your main line out to the world, and outside of your internet bill, you might not consider the other services you might use. Consider the following:

        • A free website could work, but it will hinder your website and a properly-done one will almost certainly bring in more revenue than what you paid if your outreach is done correctly.
        • You might use Google Docs, but eventually you’re probably going to need Word for one occasion or another.
        • Productivity, billing, and online tax services are generally worth the costs or outright necessary.

    There are also smaller services. A grammar checker, for example, will save you a lot of money in the long run, but it might cost you for more advanced features, should you need them. Social media tools are likely necessary. Professional apps and services will cost money, and you should prepare to spend on them.

    Equipment Replacement, Maintenance, and Supplies

    You likely have your startup equipment already planned and your initial supplies sorted out, but do you have the replacement items listed in your budget? You’re going to need to buy ink at some point, and after a little while you’ll either need to update some tools to keep up with competitors or simply replace items that have broken.

    The exact amount of money you’ll need to put away for these expenses will become clearer as time goes on, but early on you should keep this in mind and have a general fund for these things as well as equipment you didn’t know you needed.

    Bad Debts

    People and businesses that operate online are often more susceptible to shady customers and clients. You’ll need to fend off scams, which are pretty easy to spot. Depending on your model, however, you’ll also need to deal with non-paying clients, which is a common difficulty. Good billing practices can mitigate your losses and your risks, but eventually this problem happens to all businesses.

    It won’t be all that easy to run down non-paying clients, and in some cases, you might need to either turn to a collection agency (if such a move is even worth it) or write it off as a bad debt, which eases your tax burden but still is a hit to your income and an eventual cost you should keep in mind.

    Insurance, Licenses, Taxes, and Fees

    These costs will vary widely depending on your business model and general industry, but you would be surprised how many home business owners don’t realize these costs until it’s either too late or they do their quarterly reports. Insurance is recommended for businesses that are reliant on keeping their stock or prone to lawsuits, and more regulated industries might need a special license or two. Taxes are always a concern and almost certainly something you thought about in general terms, but you might want to look into the specific taxes your business might have to pay.

    For example, if you use PayPal to accept payments, they are going to take a small cut. You would be surprised at how quickly that can add up. Additional payment and banking fees also can become a big concern for your small home business.

    We strongly recommend you ask some more experienced peers or do some heavy research to nail down these costs before they nail down your business.


    There are yet more costs that might affect your business, depending on your sector and your business’ individual needs. We recommend that you set aside some extra money just in case something comes up. As well as you might plan, the thing you need to plan for the most is the unexpected.

    We’re confident that you can succeed and we hope that the above information gives you some insight on planning your home business. Do you know of any other costs you would like to share? Have you dealt with any of the above expenses in the past? If so, please leave a comment below and join the conversation.

    Bio: Kevin Conner is a busy entrepreneur who has almost exclusively worked at home. He’s launched several businesses and his strengths lie in creating strategic visions and leading a team to successfully execute them. Most recently he and his team have launched, a home services search engine.

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About the Author
An online marketer, SEO copywriter, and speaker for 15+ years, Gloria Grace Rand has helped over 150 companies including AAA and Scholastic Book Fairs attract and convert leads into sales.

Losing her older sister to cancer propelled Gloria on a journey of spiritual awakening that resulted in the publication of her international best-selling book, "Live. Love. Engage. – How to Stop Doubting Yourself and Start Being Yourself."

Known as “The Light Messenger” for her ability to intuitively transmit healing messages of love and light, Gloria combines a unique blend of energy healing techniques, intuition, and marketing expertise to create transformational results for her clients.

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