How to Estimate Startup Costs: One-Time vs Ongoing Expenses
Updated: Oct 22
Before you sign a lease, order equipment or apply for financing, you need a realistic answer to one question: how much money will it take to open your doors and keep them open until sales cover the bills?
Start by splitting your costs into two groups: one-time costs you pay to get the business ready, and ongoing costs you pay every month, whether or not customers have arrived. Here is how to list both, catch what is easy to miss and turn the totals into a budget you can explain to a lender.
Why the split matters
The two groups answer different questions:
One-time costs tell you how much money you need before launch.
Ongoing costs tell you how long that money will last and how much you must sell each month to break even.
Mixing them hides both answers. A business with modest launch costs but high monthly rent can run short of cash faster than one with an expensive fit-out and low overheads.
Step 1: List your one-time costs
Write down everything you must buy or pay before, or around, opening day:
Registration and licences: business name registration or incorporation, a municipal business licence and any industry permits. In Saskatchewan, for example, Information Services Corporation (ISC), which runs the corporate registry, lists $65 to register a business name and $255 to incorporate a business corporation, at the time of writing. In Alberta, registry agents and other service providers charge a government fee plus a service fee.
Premises: security deposit, first month's rent, renovations (leasehold improvements), signage and furniture.
Equipment and technology: tools, machinery, computers, point-of-sale hardware and vehicles.
Opening inventory and supplies: your first stock order, packaging and office supplies.
Launch marketing: brand basics, a website and opening promotions.
Professional fees: help with your business plan, and legal or accounting advice on items such as a lease.
Deposits and set-up fees: utility deposits, software onboarding and payment terminal set-up.
Budget the full price of equipment and vehicles. For tax purposes, their cost is generally claimed as capital cost allowance (CCA) over several years rather than deducted all at once, but that affects your tax estimate, not the cash you need on day one.
Step 2: List your ongoing monthly costs
Next, list what you will pay regularly once you are open, converting annual and quarterly bills into monthly amounts:
Occupancy: rent, utilities, internet and phone.
Insurance: premiums for the coverage you need, such as liability, property or vehicle insurance.
Software and banking: subscriptions, bank fees and payment processing fees.
People: wages plus employer costs. Employers contribute an amount equal to the CPP contributions deducted from employees' pay and pay EI premiums at 1.4 times the employee amount. In Alberta, workers' compensation coverage is required by law for most industries, which adds premiums.
Renewals and filings: in Edmonton, business licence fees depend on your business category, and licences must be renewed before they expire. A Saskatchewan corporation pays $60 to file its annual return by the due date, at the time of writing.
Marketing and bookkeeping: the regular cost of finding customers and keeping records.
Loan and lease payments: if you finance equipment or launch costs.
Your own pay: what you need to cover personal living costs. If you will live on savings at first, count those months too.
Step 3: Catch the costs that are easy to miss
Sales tax on purchases. In Alberta, taxable purchases carry 5% GST; in Saskatchewan, many purchases carry 5% GST plus 6% PST. If you are registered for GST/HST, you can generally recover the GST/HST paid on purchases for your commercial activities through input tax credits (ITCs), but only when you file your return, so you still need the cash up front. ITCs do not cover PST, so ask your accountant how PST applies to your purchases.
Delays. Permits, renovations and deliveries can take longer than planned, which can mean paying rent and wages before you earn anything.
Slow-paying customers. On 30-day invoice terms, cash from your first sales may arrive weeks after your own bills are due.
Minimum orders. Supplier minimums can make your first inventory order larger than planned.
Small recurring items. Domain names, email accounts, memberships and card fees add up over a year.
Step 4: Add a contingency and calculate your runway
Turn both lists into one figure: the cash you need to launch and operate until sales cover your costs.
Add up your one-time costs.
Add a contingency for surprises. The less certain your estimates, the larger it should be; written quotes reduce that uncertainty.
Add up your ongoing monthly costs, including your own pay.
Estimate, cautiously, how many months it will take for sales to cover those costs.
Multiply your monthly costs by that number of months to set a working capital reserve.
Add the results of steps 1, 2 and 5. You can reduce the total by the cash you realistically expect from early sales.
A simple illustration with round numbers: one-time costs of $40,000, a 15% contingency ($6,000) and ongoing costs of $5,000 a month for six months ($30,000) add up to a startup budget of $76,000 before any early sales. Your figures will differ, but the method is the same.
Step 5: Test your numbers and match them to funding
Replace guesses with quotes. Get written quotes for renovations, equipment, insurance and major software, and note the date of each one.
Use free templates. The Business Development Bank of Canada (BDC) offers free templates, including a business plan template and a cash flow calculator.
Match each cost to a source of money. Show which costs your savings will cover and which need outside funding. The Canada Small Business Financing Program helps small businesses get loans from banks, credit unions and caisses populaires for items such as equipment and leasehold improvements by sharing the risk with lenders; the lender makes the approval decision.
Keep the budget current. Update it when quotes change, and compare actual spending with the plan after launch.
How First Global Citizen can help
We help founders build a complete startup budget as part of a business plan or feasibility study: we work through your one-time and ongoing costs with you, organize supplier quotes, set up the contingency and runway calculation, and connect the totals to your cash flow forecast and the use-of-funds section of any funding application. We can also support your business registration, with government and registry fees charged at cost.
Every engagement starts with a written proposal and a fixed fee. When you need legal, tax or accounting advice, such as how a purchase is treated for tax, we coordinate with independent licensed professionals. Learn more about our business plan services, see how we work, or book a free consultation.
This article is general information only. It is not legal, tax, accounting or financial advice. Fees and requirements can change, so confirm current details with the relevant government agency or registry. For advice about your situation, consult a qualified professional.
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