What it costs to start — by state and by kind of business

Ask what a business costs to start and you'll get a filing fee. The filing fee is the smallest number involved and often the least interesting: $50 in Colorado, $99 in Ohio, $520 in Massachusetts. What actually decides whether a business opens is the total of the things bought once, plus three months of the things bought every month, minus whatever comes in during those three months — which for most businesses is not very much.

So this page counts in two columns and keeps them apart. One-off spend is what leaves the bank once: equipment, a deposit, the state's fee. Monthly spend is what leaves every month whether or not anyone buys anything: rent, insurance, fuel, software, and your own pay. The first tells you what you need saved. The second tells you how fast it disappears, which is the number that actually kills businesses.

A budget that's wrong is usually not wrong by a bit on every line. It's wrong because five specific things aren't on it at all, and together they're often a third of the real number.

One line that people over-budget instead: the website. A live page that takes a booking or a payment is worth a great deal on day one; a $6,000 custom build usually isn't, because you don't yet know what the business is. Spend the difference on the advertising line, which is the one that finds out whether anyone wants this.

Three real shapes of business, priced properly, each with the founder's pay included and each in a different state so the formation line is the state's own. None of them is a recommendation of what to spend — they're a demonstration of proportion, and the proportion is the lesson: the fee is a rounding error, the monthly figure is the business.

$4,400 of one-off spend, $3,865 a month. The formation fee — $50 in Colorado, $25 a year after — is under one per cent of the total, which is the answer to anyone agonising over which state to file in for a business that operates in one place. What matters here is that $3,865 leaves every month from day one, so this founder needs $3,865 of revenue a month just to stop the decline: about twenty-two jobs at $180, or five a week.

$32,700 before opening and $12,240 a month after. This is the shape that catches people out: the fit-out is the number everyone plans for, and the $36,720 of monthly costs across the first quarter is nearly as large. Break-even at $12,240 a month means roughly 45 customers a day at a $9 average, seven days a week, before the owner earns anything above the pay already in the table. Buying the equipment second-hand is the single biggest lever on this budget, and it's worth taking.

$5,275 of one-off spend, $4,160 a month — the cheapest of the three to start and the one where the money is most easily wasted. The advertising line does the work: it is the experiment that tells you whether the product sells, and the cost of finding a customer is the number this business lives or dies by. Spend it in small, measured amounts and stop the ones that don't produce orders, rather than committing three months of budget to a channel on faith.

Two founders both need $15,995 to start. One has $15,995; the other has $31,455. They are not in the same business. The first has ninety days to reach break-even and no room to be wrong; the second has seven months, which is enough time to try a second angle after the first one fails. The total tells you whether you can open. Cash divided by monthly burn tells you what happens next, and it's the number to plan against.

Which is why the calculator above shows runway on day one, before a single sale — cash left after the one-off spending, divided by what goes out every month. If that figure is under three months, the honest read is not "start leaner", it's "start smaller or start later": cut the one-off spend hard, keep the day job for another quarter, or open with a smaller version that proves demand before the fit-out. Under six months is workable but leaves no room for the thing that always happens. The full runway calculator, with revenue in it, is here.

The other reason to keep one-off and monthly apart is that they respond to completely different decisions. One-off spend is cut by buying second-hand, leasing instead of owning, or simply not buying the thing until a customer has paid for it. Monthly spend is cut by choosing a smaller space, doing your own books for the first year, or not hiring until the work exists. Only the second kind compounds — a $300 monthly subscription cancelled in month two is $3,600 of runway you didn't know you had.

Be tight on anything that can be bought later. Equipment beyond what the first ten jobs need, a second month of stock, branded anything, an office, software you haven't outgrown the free tier of, and a website that costs more than a month of advertising. None of these makes a customer more likely to buy this quarter, and each one converts flexible cash into a thing you now own.

Don't be tight on the four things that stop the business existing. Insurance, because one claim is larger than every saving on this list. The licence or permit your trade actually requires, because operating without it is a fine and a closure. A way to take payment on day one, because a business that can't charge isn't trading. And the advertising or outreach that finds the first customers, because everything else on the budget assumes they arrive.

And be honest about the deposit-shaped costs. A lease deposit, a stock order and a vehicle down payment all feel like investments and all behave like money you can't get back this quarter. Before committing to any of them, check what happens to the runway figure above if the first ninety days produce half the revenue you expect — because for most new businesses, they do.