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Accurately budgeting your start-up is crucial to making your business successful. Precisely itemizing your start-up expenses makes it easier to communicate with banks and investors. Also, it helps you to correctly forecast your profitability in the first year of your business, which has tax ramifications. Finally, your start-up expenses and any debt you incur become part of you financial projections for your business plan. Start-up expenses may differ from business to business, but include the following categories. Expenses for structuring your business. If you have to consult a CPA or lawyer, include those expenses. Include fees for registering your business with your state and for obtaining your tax identification number with the IRS. Cost of obtaining licenses and permits and for complying with state and federal safety and environmental regulations. Purchase or lease of your business location. Purchase or lease of equipment. Purchase of start-up inventory. Before you ever make a sale, you will need to purchase materials such as wood, glass, metal and textiles to make your initial pieces of furniture. Advertising and marketing expenses. Wages and benefits for your employees. Whether you've been doing woodworking as a hobby in your home or have worked in a more commercial setting, you probably already own some equipment. However, if you plan to grow your business by offering new products or getting into a new market, you may need to upgrade your equipment. Don't waste time and money rigging your already-existing equipment to make new pieces. For example, Tom Dolese of Terra Firma Design in Bellingham, WA states that his investment in a horizontal mortise allowed him to do complicated joinery precisely and efficiently. Choose from a variety of methods for funding your business. You may have enough in personal savings to invest in your business. Or, you might have friends, family or other business associates who would be willing to invest in your furniture making store. You would either make plans to pay back their loan or offer them a share in your company, depending on your business structure. Finally, you can finance your business with a loan. The Small Business Administration (SBA) partners with banks and lending institutions to offer loans to help business owners. Other funding sources include a personal line of credit from your bank, peer-to-peer lending sites like Prosper, tapping into your retirement account, using credit cards, getting a home equity loan or using a crowdfunding site like Kickstarter or GoFundMe.
Forecast your start-up expenses. Plan to acquire high-quality equipment. Find funding sources.