When creating a budget for your new Missouri-based business, you need to factor in every cost from the get-go to ensure you’re financially stable when you open shop. Unfortunately, the hidden costs that come with starting a business will hit you long before you ever open your doors. The following five expenses can be costly setbacks to Missouri business owners who fail to include them in initial budgetary plans. Small business owners working with limited budgets should take special care to set aside enough funds to cover these hidden costs.
1. License and registration fees
Licensing and registering your business as its own entity in Missouri could cost more than you might expect. Exact costs will vary depending on the type of business you plan to operate. The following are a few common license and registration fees for Missouri businesses.
- Applying to register a business as a Limited Liability Partnership (LLP) costs $30 for one general partner, $55 for two general partners, $80 for three general partners and $105 for four or more general partners.
- Receiving a certificate for a business to be a Limited Liability Company (LLC)costs $105.
- Incorporation fees range from $58 to $143 unless authorized capital exceeds $200,000, in which case the fee increases accordingly.
For information on additional license and registration fees mandated at the state level, contact the Missouri Secretary of State.
2. Surety bonds
Although most new business owners have never even heard of surety bonds, they certainly can be a financial setback. Government agencies frequently require surety insurance as a prerequisite to the business licensing process, which is why they’re also known as license and permit surety bonds. Surety bond premiums range from just $100 to thousands of dollars depending on the type of bond needed, its amount and fees charged by the surety provider. Before calculating a premium for the bond you need, your Missouri surety bond company will conduct a thorough review of your financial credentials. As such, an applicant’s credit score usually plays a role in determining the surety bond cost. Many surety providers offer premium financing plans for bad credit bonds so business owners don’t have to pay the full amount upfront. Small business owners who have trouble getting a surety bond through the commercial market can look to the Small Business Administration’s Office of Surety Guarantees for bonding assistance.
3. Background checks
Certain industries legally require business owners to conduct criminal background checks of potential employees before hiring them. Some business owners choose to conduct background checks as a part of the application process even when they’re not required to do so. No matter your reason for requiring background checks, they can become costly as you interview more and more prospective employees. Missouri background check pricing varies depending on the extent to which you want to investigate.
- A name-based search costs $10 per request and includes “possible match” results of open record information only.
- A fingerprint based search costs $20 per request and includes “positive match” results of closed/complete records.
- Electronic image capturing (also known as livescan) for fingerprint-based applicant background checks costs $32.95 for each request at the state level and $52.20 for each request at the federal level.
Business owners can submit their requests for criminal background checks to the Missouri State Highway Patrol.
4. Health insurance
Missouri business owners are not required by law to provide health insurance to their employees. However, doing so can be an attractive incentive for potential employees. The Missouri Department of Insurance explains:
The cost of health insurance for employees — by far the single most expensive benefit offered by employers — is one of the greatest challenges many small businesses face today. As business owners know, health insurance is a powerful tool for hiring and keeping the best workers.
New business owners might not initially realize how expensive it can be to provide health insurance for their employees. According to 2006 data from the federal government, the average premium for small group health insurance in Missouri was $365 per month ($4,385 annually) per employee and $790 per month ($9,476 annually) for family coverage. If you’re interested in providing health insurance as a benefit for your employees, visit the department’s website to find what plan best fits your business.
5. City and county licenses, permits and taxes
Depending on where exactly you plan to set up shop, how much you’ll have to pay in additional fees at the county and/or city level could be substantial. To determine what additional paperwork and associated fees you’ll have to provide, contact the city hall and/or county government offices that regulate your profession. Take further note that these hidden costs don’t only apply to business startups; they’re ongoing expenses that business owners need to prepare for each year. Failing to keep your business registered, licensed and bonded according to law can result in legal action, penalty fines and even license revocation. Keeping on top of all budgetary costs — even those oft forgotten — from the beginning will save you time, money and headaches later on.
Danielle Rodabaugh was born and raised in Missouri and currently works for SuretyBonds.com, which is based out of Columbia, Missouri. SuretyBonds.com works with new business owners every day, so the company’s educational outreach program provides educational resources to help working professionals operate their enterprises more effectively.