One Shocking Expense I Had to Pay When I Started My Own Business

When you start a small business, there are different expenses that can come up during those early days. My accountant had to file certain paperwork with the state to get my venture up and running. And, as expected, I had to pay for the associated filing fees as well as his time. I also had to engage a payroll service so that I, as my company's sole employee, could get paid through official channels.

These were expenses I knew to expect, and so I'd saved for them accordingly. But there was one expense I encountered when I started my business that really threw me for a loop. And to this day, I resent having to cover it.

When you're paying for something you feel you get no benefit from

One thing I didn't know about starting a business is that as a rule, you have to maintain workers compensation insurance. The purpose of this is to protect your business from a lawsuit in the event that one of your employees gets injured while on the job.

This rule certainly makes sense for companies with actual employees. The reason it surprised me -- and annoys me to this day -- is that I'm my company's only employee. I didn't think you needed workers compensation insurance when you don't have workers other than yourself.

Meanwhile, the Hartford says that most of its customers with less than $300,000 in annual payroll expenses pay an average of $70 a month for workers compensation insurance. That's fairly in line with what I pay. But still, we're talking about spending more than $800 a year on a policy that protects my company in case I sue myself. And I have no reason to do that.

The way my business is set up, I can take distributions from my profits when I want to. So if I were to get hurt on the job and sue myself, the damages would come out of my own business bank account.

Plus, I own a content-writing business. And while accidents can certainly happen anywhere, it's not as if sitting at a desk hammering away on a laptop is particularly dangerous work. To be fair, though, the requirement for workers compensation applies no matter the nature of your business.

It's important to go in prepared

I wish I would've known before starting a business that I'd have to bear the expense of workers compensation insurance. I don't think that would've stopped me from starting my company, but it would've been a nice thing to plan for.

If you're gearing up to start a business, I highly recommend talking to people you know who have gone the same route so you can see what their experience was like. Just as importantly, set up a meeting with your accountant to review the specific expenses you're likely to face in the course of setting your business up. That way, you can budget more accurately and avoid surprises.

Starting a business is stressful and time-consuming even when everything goes smoothly. You don't need unexpected costs throwing your finances for a loop.