Startup Cost Calculator

What It Costs to Open a Small Shop in 2026

Opening a store is a cash flow problem before it is a sales problem. The bills arrive in a different order than the revenue: the filing fee this week, the lease deposit next month, the equipment before the doors open, and rent every month whether or not anyone walks in. A budget built only from the visible costs, the sign and the shelving, comes up short by the amount of the invisible ones.

Add the low column and you get a budget for a business that cannot open. Add the high column and you get a number that talks people out of starting at all. The useful exercise is to fill in your own line items, which is what the calculator above does, and then add the months of operating money that this table leaves out.

Registration Is the Cheap Part

Three filings stand between an idea and a legal business, and only one of them costs real money. The employer identification number is free from the IRS, which says plainly on its EIN application page that no one ever has to pay for one. Services charging $50 to $300 for an EIN are filing a form you can complete yourself in about ten minutes. A business license from the city or county typically runs $50 to $550 depending on the permits your trade needs.

The state filing fee is the line people compare, and the range is wide. Nolo's 2025 survey of state LLC fees puts Montana at $35 and Massachusetts at $500, with most states between $50 and $200.

The filing fee is not the cost of the entity, which is the trap in California. A $70 filing looks like a bargain until the $800 minimum franchise tax lands in the first year, putting the real first-year cost near $870. Massachusetts pairs its $500 filing with a $500 annual report, so year two costs as much as year one. New York adds a publication requirement that can run several hundred dollars depending on the county.

The One-Time Costs That Break a Budget

Equipment and inventory are where a retail budget usually goes wrong, and survey data is blunt about the split. A Business.org survey cited by Investopedia's startup cost overview found storefront owners spending an average of $100,000 in their first year, with 30 percent going to inventory, 21 percent to equipment and 15 percent to the location. Online-only businesses averaged $35,000 in the same survey.

The hidden items are the ones with deadlines. A landlord wants first month, last month and a security deposit before handing over keys, so a $2,400 a month space can take $7,200 at signing. Utilities want deposits. A sign permit can take six weeks and cost more than the sign itself. A point of sale system needs a card reader, a stand and a month of setup before the first sale, and a health inspection can push opening day past the first rent check.

Equipment carries a second cost that rarely appears in the spreadsheet: the thing you buy twice. A $900 display case that turns out too small is a $900 display case plus a $1,400 replacement. Buying the used version of a fixture you will replace in a year is a false saving, while buying the used version of a fixture that never moves is the best money in the budget.

Working Capital: Runway Beats Sticker Price

Startup costs get a business open. Working capital keeps it open while customers find it. The SBA startup cost guide tells owners to count at least one year of monthly expenses and calls five years ideal. The formula fits on a napkin: monthly operating cost times the number of months you want to fund.

Monthly operating cost means everything that repeats: rent, utilities, insurance installments, loan payments, software, wages and your own draw. A shop with $2,400 rent, $450 of utilities, $5,200 of wages and $600 of loan and software costs burns $8,650 a month. Six months of that is $51,900, and it sits on top of every one-time cost in the budget rather than replacing any of them.

Six months is a common choice for a storefront because retail traffic builds slowly and the first quarter is usually the weakest. A seasonal business needs the off season covered, which can mean nine months rather than six. A service business with no storefront and almost no overhead can often run on three.

How Big a Cash Cushion to Hold

The SBA's startup cost guide suggests adding about 10 percent on top of a break-even estimate to cover the expenses nobody predicts. For a first-time owner, 15 percent is a safer target, and a build-out with contractor work can justify 20. The cushion is not profit and not a slush fund. It is the money that pays the second invoice from the electrician without a credit card advance.

The default budget in the calculator lands at $125,050 before the cushion. Fifteen percent of that is $18,758, which brings the total to $143,808. That last number is the one to compare against a bank balance, a loan offer and a partner's contribution, because it is the amount that keeps the business alive through a slow first quarter.

Two habits keep the cushion honest. Keep it in the business account, not mentally folded into a savings goal, so the number on the statement matches the number in the plan. And never let a supplier discount tempt you to spend it on inventory: a 2 percent early payment discount is worth taking, a whole new product line is not.

A Worked Budget for a 1,200 Square Foot Shop

Here is the full picture for a 1,200 square foot retail shop in Texas with one employee and a three month deposit. Every line is a number a first-time owner can get a quote for before signing anything.

The one-time column is $73,150 and the working capital is $51,900, which add to $125,050. A 15 percent cushion on that subtotal is $18,758, so the total comes to $143,808. Put differently, the shop needs roughly twice its one-time cost in cash before the first customer walks in, and the gap between those two numbers is why so many well planned openings run short in month four.

What You Can Deduct in Year One

Startup spending is not all deductible when you write the checks. Under Section 195 of the tax code, a new business can deduct up to $5,000 of start-up costs in the year it opens, and that deduction shrinks dollar for dollar once start-up costs pass $50,000, disappearing entirely at $55,000. Anything left over is deducted over 180 months, which works out to 15 years.

The $73,150 in the budget above is past the phase-out, so the first-year deduction is $0 and the monthly write-off is $73,150 divided by 180, or $406.39. That is a cash flow fact worth knowing before the first tax season. A large build-out does not produce a large first-year deduction; it produces a small one spread over 15 years.

Equipment is treated separately. Fixtures and machinery are depreciated as assets rather than counted as start-up costs, and a tax preparer can explain the expensing election that may apply to them. The line between start-up costs and depreciable assets is exactly where a $300 conversation with an accountant pays for itself, so book it before the first receipt lands.

Funding the Gap and the Order to Do Things In

Most owners fund the gap with a mix of savings, a loan and supplier terms. The SBA backs loans made by participating lenders and runs a lender match service, and it supports microloans through local intermediaries for amounts too small for a bank term loan. Supplier terms are the cheapest capital in retail when a vendor offers 30 days: the inventory arrives before the invoice is due, and the sale pays for it.

Credit cards are the most expensive version of the same money. A card with a 0 percent introductory rate can bridge a build-out, but the balance has to be gone before the rate resets, and a shop still buying inventory on the card in month eight is funding losses rather than growth.

The order of operations matters as much as the money. Form the entity, get the EIN, pull the licenses, collect insurance quotes, sign the lease, buy equipment, stock the shelves, then market. Signing a lease before the zoning and license questions are answered is the single most expensive mistake on that list, because a lease is the one contract a startup cannot walk away from cheaply.