Startup costs are the initial investments and expenditures a new business must make before it can begin operating. They can include expenses such as legal fees, office space rental, initial inventory, marketing, and employee salaries. These costs have a major impact on a startup’s early financial health. Financial stability is especially important in a business’s early stages, when income might be low or inconsistent: a 2026 analysis found that 70% of startups fail because they run out of money.

Below, we’ll explain common startup costs, how to determine yours, how to save on them, and how to use your startup cost calculations to get funding.

What’s in this article?

• Common business startup costs
  
• Common startup costs by business type
  
• How to determine your startup costs
  
• How to save on startup costs
  
• How to use your startup cost calculations to get funding
  
• How Stripe Atlas can help
  

Common business startup costs

Startup costs depend on business type, industry, location, and scale so each startup’s costs will be different. All businesses generally need to pay standard business formation costs regardless of structure—for example, corporation, limited liability company (LLC), or sole proprietorship. Recurring costs for businesses might include taxes, salaries and wages, and ongoing professional services (e.g., lawyers, accountants).

Other costs, however, vary based on physical or digital footprint and whether your business is service-based or product-based. Here are the types of startup costs that businesses face.

Common startup costs by business type

Below are the estimated ranges of startup costs for common business models, along with the primary expenses that drive those numbers:

• Full-service restaurant or bar: $150,000–$600,000+
  High launch costs are driven primarily by commercial kitchen build-outs (e.g., ventilation, refrigeration, stoves), high-traffic real estate lease deposits, local compliance permits (including costly liquor licenses), and preopening training payroll.

• Coffee shop or café: $80,000–$300,000
  The costs include specialized beverage equipment (e.g., commercial espresso machines, grinders, water filtration), plumbing adjustments, interior counter and seating design, and initial ingredient sourcing.

• Food truck: $50,000–$150,000
  This business requires up-front capital for commercial vehicle acquisition, kitchen retrofitting, custom vinyl wraps, mobile health permits, and mandatory fees for overnight commissary kitchen rental.

• Yoga or fitness studio: $30,000–$100,000
  Initial capital is concentrated in interior build-outs (e.g., specialized flooring, mirrors, heavy climate control or ventilation), booking and membership software, and early marketing campaigns to build a local client base.

• Ecommerce or online store: $5,000–$50,000
  The lower physical overhead is offset by digital development costs, platform subscriptions, initial inventory manufacturing or warehousing, and heavy up-front spending on paid advertising to capture online search traffic.

Regardless of your industry, aim to have 3–6 months of operating expenses tucked away in cash reserves. Many startups fail because they run out of cash before they achieve profitability.

How to determine your startup costs

Here’s how to get started mapping out your expenses.

List and categorize expenses

Create a comprehensive list of expenses you might encounter, from legal fees to office supplies. Divide your expenses into broad categories such as legal and professional fees, marketing and advertising, technology, equipment and supplies, inventory, and operational costs. Then, categorize your expenses into one-time costs (those incurred only once during startup) and recurring costs (ongoing expenses such as rent, utilities, and salaries).

Research estimated amounts

Conduct the following research to estimate the cost of each expected expense:

• Explore online resources such as the US Small Business Administration (SBA) website, industry-specific websites, and blogs for startup cost checklists and guides.

• Research average startup costs for businesses similar to yours in your industry and location.

• Seek advice from accountants, lawyers, business advisers, or experienced entrepreneurs in your field.

• Contact vendors and suppliers for quotes on specific items or services you need. This will give you a more accurate picture of your expenses.

Create a budget

Organize your expenses into a spreadsheet, listing each item, its category, whether it’s a one-time or recurring cost, and the estimated amount. Note which expenses are necessary for launching your business and which can be postponed or reduced. Allocate a contingency fund (typically about 10%–20% of your total estimated costs) to cover unexpected expenses.

Review and refine

Review your list periodically and update it as you gather more information, or as your business plans change. As you get more accurate cost estimates, adjust your budget accordingly. Keeping these costs manageable can allow startups to cover key operations such as payroll and supplier payments, help manage financial stress, and possibly make the startup more attractive to investors. Investors are typically drawn to startups that demonstrate prudent financial management because that increases the likelihood of a return on their investments.

How to save on startup costs

Saving on startup costs helps maintain financial health during the early stages of your business. Here are some tactics to reduce expenses:

• Simplify your budget: Adopt a lean approach by focusing on the key items that create direct value for your customers. Avoid overspending on nonessential features, products, or services at the outset.

• Use virtual and remote offices: Instead of leasing a dedicated office space, consider virtual offices or coworking spaces. These options can reduce rent expenses and often come with added benefits such as access to conference rooms and business equipment.

• Outsource some functions: Rather than hire full-time employees for every role, outsource functions such as accounting, human resources (HR), and information technology (IT). This can minimize costs associated with salaries, benefits, and office space.

• Opt for lower-cost equipment: Buy refurbished office furniture and equipment. Many businesses sell their nearly new, high-quality equipment at a reduced price, which can save you money up front.

• Negotiate contracts: Try to negotiate more favorable terms or discounts from suppliers and vendors, especially if you can offer something in return such as prompt payments or a long-term contract.

• Reduce software costs: Take advantage of open-source software for tasks such as emails, office applications, customer relationship management (CRM), and data management. Many software companies also offer a free tier, which might be sufficient for your needs in the early stages.

• Prioritize low-cost marketing: Instead of spending on expensive ad campaigns, start with low-cost marketing tactics such as social media marketing, content marketing, and search engine optimization (SEO). These methods can be highly effective and cost-efficient.

• Use in-house skills: Handle tasks internally if you or your team have the skills, such as designing your website, handling basic legal requirements, and managing your books.

• Monitor your finances: Regularly review and adjust your budgets based on actual spending and income. This can help you avoid overspending and identify areas where you can cut costs.

How to use your startup cost calculations to get funding

Carefully calculating startup costs can help you secure funding for your new venture. Here’s a step-by-step guide to doing so.

Create a business plan

To get funded as an early-stage startup, first create a comprehensive business plan that integrates your cost calculations and includes clear explanations and justifications for each cost item.

Use your cost calculations to develop realistic financial projections for your business. These projections should include income statements, cash flow statements, and balance sheets, showcasing how your business will generate revenue and become profitable over time.

Customize your pitch to your audience

Here’s what you should focus on when you pitch to investors vs. lenders:

• Investors: Investors are primarily interested in the growth potential and return on investment of your business. Focus on your unique value proposition, target market, competitive advantage, and scalability. Use your cost calculations to showcase how their investments will fuel your growth and generate returns.

• Lenders: Lenders are more concerned with your ability to repay the loan. Emphasize your creditworthiness, financial stability, and ability to generate consistent cash flow. Use your cost calculations to show that you have a solid plan for managing expenses and repaying the loan on time.

Present a compelling case

Be honest about your startup costs and financial projections. Avoid inflating numbers or making unrealistic promises. Explain why each expense is necessary for your business’s success. Demonstrate how these investments will contribute to your growth and profitability.

Additionally, you should acknowledge potential risks and challenges that your business might face and showcase your plans to mitigate them. Demonstrate your passion and dedication to your business. Show that you’re fully committed to its success and willing to put in the hard work required.

Seek multiple funding options

Here are the different types of funding options you might consider:

• Angel investors: Angel investors are individuals who invest their own money in startups in exchange for equity. They are often willing to take on higher risks in exchange for potentially high returns.

• Venture capitalists: Venture capitalists are professional investors who invest in startups with high-growth potential. They typically invest larger sums of money and take an active role in the company’s management.

• Small business loans: Small business loans are offered by banks and other financial institutions. They’re typically secured by collateral and require a good credit history.

• Grants: Grants are funds that don’t need to be repaid. They’re offered by government agencies or private organizations to support specific industries or causes.

How Stripe Atlas can help

Stripe Atlas sets up your company’s legal foundations so you can fundraise, open a bank account, and accept payments within two business days from anywhere in the world.

Join 75K+ companies incorporated using Atlas, including startups backed by top investors like Y Combinator, a16z, and General Catalyst.

Applying to Atlas

Applying to form a company with Atlas takes less than 10 minutes. You’ll choose your company structure, instantly confirm whether your company name is available, and add up to four cofounders. You’ll also decide how to split equity, reserve a pool of equity for future investors and employees, appoint officers, and then e-sign all your documents. Any cofounders will receive emails inviting them to e-sign their documents, too.

Accepting payments and banking before your EIN arrives

After forming your company, Atlas files for your Employer Identification Number (EIN). Founders with a US Social Security number, address, and cell phone number are eligible for IRS expedited processing, while others will receive standard processing, which can take a little longer. Additionally, Atlas enables pre-EIN payments and banking, so you can start accepting payments and making transactions before your EIN arrives.

Cashless founder stock purchase

Founders can purchase initial shares using their intellectual property (e.g., copyrights or patents) instead of cash, with proof of purchase stored in your Atlas Dashboard. Your IP must be valued at $100 or less to use this feature; if you own IP above that value, consult a lawyer before proceeding.

Automatic 83(b) tax election filing

Founders can file an 83(b) tax election to reduce personal income taxes. Atlas will file it for you—whether you are a US or non-US founder—with USPS Certified Mail and tracking. You’ll receive a signed 83(b) election and proof of filing directly in the Stripe Dashboard.

World-class company legal documents

Atlas provides all the legal documents you need to start running your company. Atlas C corp documents are built in collaboration with Cooley, one of the world’s leading venture capital law firms. These documents are designed to help you fundraise immediately and ensure your company is legally protected, covering aspects like ownership structure, equity distribution, and tax compliance.

A free year of Stripe Payments, plus $50K in partner credits and discounts

Atlas collaborates with top-tier partners to give founders exclusive discounts and credits. These include discounts on essential tools for engineering, tax, finance, compliance, and operations from industry leaders like AWS, Carta, and Perplexity. We also provide you with your required Delaware registered agent for free in your first year. Plus, as an Atlas user, you’ll access additional Stripe benefits, including up to a year of free payment processing for up to $100K in payment volume.

Learn more about how Atlas can help you set up your new business quickly and easily, or get started today.