Ongoing business operating costs

Regardless of the type of business you run (or plan to run), you will be required to incur certain costs, known as the day-to-day running costs of a business. What are the day-to-day running costs of a business, and what are the most important ones? This article explores these questions.

Ongoing business operating costs – definition

Running costs are all the various types of costs that a business owner is obliged to incur to ensure the business operates fully, correctly and efficiently during a given accounting period.

Some of these running costs are expenses that every business owner, without exception, must bear (e.g. costs relating to social security contributions). Others, however, are operating costs that depend on the specific nature of the industry in question, as well as the type and manner in which the business is conducted (e.g. vehicle running costs or costs associated with the purchase of goods and materials).

What are the most important running costs of a business?

Ongoing business operating costs – social security contributions

Regardless of the type of business you run, social security contributions will always be an ongoing cost of running your business.

If you are setting up your own business for the first time, or are doing so again after a break of at least 60 months following the suspension or cessation of your business, and you will not be providing your former employer with the services you performed for them in this or the previous calendar year, you may be eligible for the so-called Start-up Relief.

This provides a six-month exemption from social security contributions (i.e. disability, pension, accident and sickness contributions). However, even during this period, you will still be required to pay the health insurance contribution as an ongoing cost of running your business (the amount of which depends on your chosen form of taxation).

Ongoing business costs – bookkeeping

Accountancy is another ongoing cost of running a business that is hard to avoid. Engaging a traditional or online accountancy firm often involves an expense of several hundred zlotys a month. Hiring a full-time accountant, however, can cost several times as much.

Of course, there is also the option of doing your own bookkeeping. Whilst this solution can significantly minimise this ongoing business cost, it does increase the risk of making mistakes and is certainly not for everyone.

Ongoing business operating costs related to the company’s registered office

The day-to-day costs of running a business also include all expenses related to the company’s premises and the place where business is carried out.

The costs of renting premises, utility bills, internet and telephone charges can represent a truly substantial monthly expense for a business.

Ongoing business running costs – staff

Although a large proportion of businesses today operate as sole traders, many entrepreneurs choose to take on staff.

This decision, in turn, creates another ongoing cost of running a business, which includes:

• Wages and salaries;
• Social security contributions for employees;
• Recruitment costs;
• Employment costs;
• Training costs.

Ongoing business costs – purchase of goods and materials

For many businesses, the basic day-to-day costs of running a business – without which the company simply cannot function – are the expenses associated with the purchase of goods and materials.

The primary material in a joinery workshop will be timber, whilst in a bakery it will be flour. The stock in a shoe shop will be footwear, whilst in a local greengrocer’s it will be fruit and vegetables.

Ongoing business operating costs – vehicles

Any business owner deciding to purchase a company vehicle must take into account the running costs associated with this decision. These include, amongst other things:

• Fuel costs;
• Insurance costs;
• The cost of MOTs;
• Servicing costs;
• Repair costs.

If the purchase of a company car is not financed with own funds, loan or lease instalments may also be added to the running costs.

Ongoing business operating costs – advertising and marketing

For many businesses, advertising and marketing costs are one of the fundamental running costs of doing business, enabling them not only to grow and reach a wider audience, but sometimes simply to survive in a highly competitive environment.

Advertising and marketing costs may include, for example:

• Costs of advertising on the radio, television or online;
• The cost of printing leaflets and business cards;
• The costs of setting up and maintaining a company website.

Common ongoing business costs:

• Social security contributions;
• Fees for services (including accountancy);
• Costs associated with the business premises;
• Costs associated with employees;
• Costs of purchasing goods and materials;
• Costs relating to company-owned vehicles;
• Loan and lease repayments;
• Advertising and marketing costs.

Are you daunted by the day-to-day running costs of a business?

The ‘Firma Dla Każdego’ Foundation realises that the day-to-day costs of running a business can be daunting and overwhelming.

That is precisely why we offer Poland’s top-rated business incubator, thereby providing you with the opportunities that come with running your own business without the need to register it (and thus without having to bear some of the day-to-day costs!).

Interested? You can find details of our offer on our website: https://firmadlakazdego.pl/.

Sources:

• https://mfiles.pl/pl/index.php/Wydatki_bie%C5%BC%C4%85ce
• https://efl.pl/pl/biznes-i-ty/artykuly/koszty-prowadzenia-dzialalnosci-gospodarczej
• https://szybkafaktura.pl/blog/jakie-sa-miesieczne-koszty-prowadzenia-dzialalnosci-gospodarczej/
• https://poradnikprzedsiebiorcy.pl/-czy-wiesz-kiedy-zakup-jest-materialem-albo-towarem-a-kiedy-pozostalym-wydatkiem
• https://www.infakt.pl/blog/pozostale-wydatki-a-towary-i-materialy/
• https://firmadlakazdego.pl/wysokosc-skladek-zus-dla-prowadzacych-dzialalnosc-gospodarcza/
• https://firmadlakazdego.pl/jaka-forma-opodatkowania-dla-firmy-jednoosobowej/
• https://firmadlakazdego.pl/czym-jest-inkubator-przedsiebiorczosci/
• https://firmadlakazdego.pl/prowadzenie-dzialalnosci-gospodarczej-bez-rejestracji/
• https://firmadlakazdego.pl/