How Much Does It Really Cost to Start a Business?

Almost every article about startup costs lies by omission. They list the obvious one-time fees — incorporation, a logo, a domain — and quietly skip the costs that actually decide whether you make it to year two: your own salary, customer acquisition, and the months of revenue you do not yet have. The real cost of starting a business is rarely the launch; it is the runway.

What follows is a candid breakdown by business type, in 2026 dollars, with the line items most founders forget. Use it to build a number that includes both setup and survival, and you will plan from reality instead of from hope.

Costs that apply to almost every business

Some expenses show up regardless of what you sell. They are small individually but add up to several thousand dollars in the first year.

• Legal entity formation: two hundred to eight hundred dollars depending on the state, plus an annual registered-agent fee of around one hundred and fifty.
• Business bank account and accounting software: zero to forty dollars a month — Mercury and Wise are free; QuickBooks and Xero start around twenty-five.
• Domain, email, and basic hosting: roughly two hundred to four hundred dollars a year.
• Logo, basic brand, and a simple website: three hundred to three thousand dollars depending on whether you DIY or hire.
• Insurance (general liability or professional): forty to one hundred and fifty dollars a month for most small operators.
• Bookkeeping and a once-a-year tax filing: eight hundred to three thousand dollars annually depending on complexity.

Service businesses: the cheapest to start

A consulting, agency, freelance, or coaching business can realistically launch for under three thousand dollars in hard costs. You need an entity, a contract template, a simple website, a payment processor, and a way to talk to clients. The expensive part is not the setup — it is the months of light revenue while you build a pipeline.

Plan for three to six months of personal living expenses before you expect steady cash flow. If you need five thousand dollars a month to live, your real cost of starting a service business is roughly fifteen to thirty thousand dollars when you include that runway. That is the number that matters, not the three thousand in software and legal.

E-commerce: inventory eats the budget

A direct-to-consumer brand can be set up technically for under a thousand dollars with Shopify, a theme, and basic apps. The real money goes into inventory, packaging, photography, and paid acquisition. A small first inventory run for a physical product typically costs five to twenty-five thousand dollars, and you will sit on most of it for months.

Marketing is the other invisible giant. Customer acquisition cost on Meta and Google for new brands routinely lands between twenty and sixty dollars per customer, and you usually need to spend several thousand dollars before the algorithm finds your buyers. A realistic minimum to launch an e-commerce brand with a chance to succeed is twenty to fifty thousand dollars including inventory, ads, and three months of testing.

Software and SaaS: cheap to build, expensive to grow

If you can build the product yourself, the technical cost of launching a SaaS is shockingly low — perhaps one to three hundred dollars a month in hosting, auth, email, and analytics. If you hire developers, expect thirty to one hundred thousand dollars for a meaningful first version, and often more.

Where SaaS budgets actually go is into your time and into distribution. Most B2B SaaS companies need at least twelve months of unpaid or underpaid founder work, plus five to twenty thousand dollars in early experiments across content, ads, and outbound. A realistic minimum to give a self-built SaaS a fair shot — including a year of modest founder salary — is fifty to one hundred and fifty thousand dollars.

The line item founders forget: their own salary

The single biggest hidden cost of starting a business is the founder's own income. Pretending you will live on savings for an unspecified amount of time is not a plan; it is a countdown. Decide on a minimum monthly draw — even if it is just enough to cover rent, food, and health insurance — and put twelve months of it into your startup budget on day one.

Founders who skip this almost always make panicked decisions in month seven or eight: taking the wrong client, accepting bad investor terms, or shutting down a working idea because they ran out of personal runway. Budgeting your own survival is part of budgeting your business.

Three numbers to write down before you start

Before you spend the first dollar, force yourself to write down three numbers. They will not be precise, and that is fine — the discipline of writing them changes the decisions you make.

• Setup cost: every hard one-time expense to get the business legally and technically operational.
• Monthly burn: every recurring cost including a realistic founder salary and the software stack you actually need.
• Months of runway you can fund from savings, revenue, or capital before you are forced to raise or quit.

How to spend less without underbuilding

The cheapest way to start a business is to do as much as possible manually before you automate, and as much as possible yourself before you hire. Deliver the service before you build the software. Take pre-orders before you produce inventory. Use a Notion site before you commission a custom build. Every dollar you delay spending becomes a month of runway, and runway is the only resource that buys you the right to learn from your customers.