The visible and invisible cost stacks
When aspiring business owners model their finances, they typically include rent, salaries and obvious stock costs. The costs that catch many out are the ones that sit below the line — small percentages and monthly fees that collectively carve a significant chunk from margins.
Payment processing
Card transactions cost between 1.5% and 3% depending on your provider, card type and transaction volume. For a business turning over £500,000 with 80% card payments, that is between £6,000 and £12,000 per year.
Insurance
Employer's liability insurance is a legal requirement the moment you hire anyone. Public liability, professional indemnity, product liability and cyber cover add further premiums. Budget at least £1,500-£3,000 per year for a small service business.
Employer National Insurance
The employer NI rate is currently 13.8% on earnings above the secondary threshold. On a £30,000 salary, that is roughly £3,000 in employer NI on top of the salary cost. Many new employers are surprised by the gap between the salary they offer and the total cost to the business.
Professional services
Accountancy and bookkeeping are not optional. A competent accountant saves more than they cost in tax efficiency and avoided HMRC penalties. Expect to pay £1,200-£3,000 per year for basic accountancy for a micro-business.