How Much Does It Cost to Start a Business in 2026?

The average cost to start a business in the US is somewhere between $3,000 and $5,000 according to the SBA. That number is technically correct and practically useless. It lumps together the freelance writer who bought a laptop and the restaurant owner who signed a $200,000 lease.

A more honest answer: startup costs depend almost entirely on what kind of business you are building. A cleaning service can launch for $800. A coffee shop needs $80,000 to $300,000. An online store sits somewhere around $500 to $5,000 if you are dropshipping, or $10,000-$50,000 if you are holding inventory.

What I can tell you, after analyzing startup costs across hundreds of industries and all 50 states, is that most new business owners either wildly overestimate or dangerously underestimate their costs. The overestimators never start. The underestimators start and run out of cash in six months.

This guide gives you the real numbers — broken down by industry, by expense category, and by business stage — so you can plan with actual data instead of guesswork.

Here is what it actually costs to start 15 of the most common businesses in the US, based on data from founders, industry surveys, and SBA reports. These ranges cover everything from formation fees to initial inventory and first-quarter operating expenses.

Notice the pattern? Service businesses that go to the customer (cleaning, consulting, freelancing) cost the least. Businesses that require a physical space (restaurants, gyms, salons) cost the most. The lease deposit alone on a commercial space can be $5,000 to $30,000 before you have spent a penny on equipment.

Every business — whether it is a side hustle or a franchise — has costs that fall into these seven buckets. Some will be zero for your particular business. None should be overlooked.

1. Formation and Legal ($50 - $2,500)

This covers your LLC filing ($50-$500 by state), business licenses ($50-$400), DBA registration ($10-$100), and possibly a trademark ($350 per class if you file yourself). See our LLC cost breakdown by state for exact numbers.

2. Equipment and Supplies ($100 - $200,000+)

A consultant needs a laptop and maybe a decent suit. A restaurant needs a commercial kitchen. This is where costs diverge the most between industries. Buy used equipment when possible — restaurant equipment auctions can save you 40-60% compared to buying new.

3. Location and Lease ($0 - $50,000+)

Home-based businesses pay zero. If you need a physical location, expect first month's rent plus security deposit (often 2-3 months). Coworking spaces ($200-$500/month) are a smart middle ground for businesses that need a professional address without a full lease.

4. Technology and Software ($0 - $500/month)

Website hosting ($5-$30/month), accounting software ($0-$60/month), POS system ($0-$100/month), email marketing ($0-$50/month), project management tools ($0-$25/month). These individually look small but stack up to $100-$300/month for most businesses.

5. Marketing and Branding ($200 - $10,000)

At minimum: a logo ($50-$300 on Fiverr), business cards ($30), and a basic website ($200-$500/year). Most new businesses should budget $500-$1,000 for initial marketing, then 5-10% of monthly revenue going forward.

6. Insurance ($500 - $5,000/year)

General liability insurance runs $300-$1,000/year for most small businesses. Professional liability (for consultants, accountants, etc.) adds $500-$2,500/year. Workers' comp is required as soon as you hire employees. Our business insurance guide covers what you actually need vs. what agents try to sell you.

7. Working Capital (3-6 Months of Expenses)

This is the money that keeps your business alive while revenue builds. If your monthly operating costs are $3,000, you need $9,000-$18,000 in the bank beyond your startup investment. This is the cost most people forget, and it is the reason many businesses fail in year one — not because the idea was bad, but because they ran out of runway. More details in our hidden startup costs guide.

Not everyone has $50,000 to invest. You do not need it. Some genuinely profitable businesses can launch for a few hundred dollars. The trade-off: you are usually selling your time and expertise rather than a product.

• House cleaning — $200-$600 (supplies, insurance, basic marketing)
• Freelance writing or design — $0-$500 (laptop you already own, portfolio site, software)
• Social media management — $100-$300 (scheduling tools, sample portfolio)
• Lawn care — $500-$1,000 (used mower, trimmer, blower, fuel)
• Pet sitting / dog walking — $100-$300 (insurance, Rover listing, supplies)
• Tutoring — $0-$500 (online platform fee, background check, materials)
• Virtual assistant — $0-$200 (computer, internet, project management tool)

The key insight: these businesses have low startup costs but can scale to $50,000-$100,000+ per year. A solo house cleaner doing 4 homes per day at $150 each, five days a week, grosses $156,000 annually. See our full list of 30 low-cost business ideas under $5,000.

There is a formula that works for most situations. It is not sexy, but it will keep you from joining the 20% of businesses that fail in year one:

Total startup budget = One-time costs + (Monthly expenses x 6) + Personal living expenses for 3 months

That last part — personal living expenses — is what separates the realistic planners from the dreamers. If you are quitting your job to start a coffee shop, you need enough to cover your rent, groceries, and car payment for at least three months while the business gets off the ground.

Here is what that looks like for a landscaping business:

• One-time costs: $12,000 (truck, equipment, formation, insurance)
• Monthly expenses x 6: $2,500 x 6 = $15,000 (fuel, supplies, software, marketing)
• Personal expenses for 3 months: $4,000 x 3 = $12,000
• Total needed: $39,000

Can you start with less? Sure — if you keep your day job and build the business evenings and weekends, you can eliminate the personal expenses buffer entirely. This is actually what I recommend for most people. The businesses-you-can-start-from-home in our home business guide are especially well-suited to this approach.

If you do not have enough saved, our startup funding guide covers 10 ways to bridge the gap — from SBA microloans ($500-$50,000) to small business grants that do not need to be repaid.

After talking to hundreds of business owners about their startup experience, these are the expenses that blindside people the most:

Quarterly estimated taxes. Nobody withholds taxes for you anymore. Owe the IRS more than $1,000 at year-end and you pay penalties on top. Set aside 25-30% of every dollar you earn.

Accounting and bookkeeping. DIY accounting works until it does not. Most business owners end up hiring a bookkeeper ($200-$500/month) and a CPA for taxes ($500-$2,000/year) within the first year. Factor this in from the start.

Website and domain costs. That $12/year domain needs hosting ($5-$30/month), an SSL certificate (usually free now), and probably a premium theme or plugin ($50-$200/year). If you need custom development, budget $500-$5,000.

Software subscriptions. CRM, email marketing, scheduling, invoicing, cloud storage — each one is "just $20/month" until you are paying $200/month for 10 tools. Audit these quarterly.

Professional development. Courses, certifications, industry conferences, books. Budget $500-$2,000/year, especially in industries where credentials matter (consulting, financial services, healthcare).

Vehicle expenses. If you drive for business, track your mileage from day one. The IRS standard mileage rate is $0.70/mile in 2026. A cleaning service driving 100 miles per day deducts $70/day in vehicle expenses — that adds up to $18,200/year.

We have catalogued all of these and more in our 12 hidden startup costs guide. Read it before you finalize your budget.

Frugality at the start is a superpower, not a weakness. Some of the most successful businesses in America started in garages and spare bedrooms. Here are proven ways to reduce your initial investment:

Start from home. The average commercial lease in the US runs $23 per square foot per year. For a 1,000 sq ft space, that is $23,000 annually before utilities. If your business can operate from home — even temporarily — that is enormous savings.

Buy used equipment. Restaurant equipment auctions, Facebook Marketplace, Craigslist, and liquidation sales can save 40-60% on everything from commercial ovens to landscaping trailers. A used commercial espresso machine that costs $15,000 new can be found for $5,000-$7,000 in good condition.

Use free software first. Wave (accounting), Canva (design), Mailchimp free tier (email), Google Workspace ($0 for personal), WordPress.com free plan (website). Upgrade to paid tools only when the free versions actually limit your growth.

Do your own legal filings. An LLC filing is a 10-minute form in most states. LegalZoom charges $79-$299 for what you can do yourself for the state fee ($50-$500). Our LLC guide walks through every step.

Barter when possible. Trade your services for what you need. A web designer who builds a photographer's site in exchange for headshots — both save money and get quality work.

Detailed strategies in our guide to reducing startup costs.

Where you start your business matters more than most people realize. The same business can cost significantly more or less depending on your state.

LLC filing fees range from $50 (Kentucky, Arkansas) to $500 (Massachusetts). California charges $800/year in franchise tax on top of its $70 filing fee — that is $800 every single year just for the privilege of existing as an LLC. Delaware and Wyoming are popular for their low fees and business-friendly laws. Our best states to form an LLC guide compares all 50 states.

Commercial rent varies dramatically. A 1,000 sq ft retail space in Manhattan averages $80-$150/sq ft/year. In Tulsa, Oklahoma, it is $12-$18/sq ft. That is a 5-8x difference for the same amount of space.

Labor costs follow a similar pattern. Minimum wage ranges from $7.25 (federal, applies in ~20 states) to $16.50+ in California and Washington. If you are hiring employees, this directly impacts your monthly burn rate.

Taxes add another layer. Seven states have no personal income tax (TX, FL, NV, WA, WY, SD, TN). Some states have no corporate income tax. Others, like New York and California, take a meaningful bite at both levels.

For detailed cost data in your specific area, search for your business type on our homepage — we have startup cost breakdowns for over 40,000 US cities and zip codes.