NEW YORK (MainStreet) — Starting your own business and being the master of your own destiny might sound great, but don’t dive into the entrepreneurial waters without a good idea of what costs you’ll absorb. From paying your own FICA taxes to health care, it’s a list any fledgling business owner should frame and put on their office wall (which you’ll also be paying for, too).

According to a study by Barlow Research, the massive Great Recession has cost U.S. small businesses upwards of $2 trillion.

“That works out to an average loss of $253,000 for each of the eight million U.S. businesses with sales between $100,000 and $10 million,” the Barlow study said. Only 35% indicated their financial condition was improving, down from 46% in the second quarter, the study added.

If small business owners could point to the top reason their businesses are suffering it would be lack of business. Consumers are hunkering down and just aren’t spending money. But another big reason why small businesses are suffering lies under the surface – in some cases entrepreneurs don’t even know it exists.

“It” is the hidden cost of running a business. Every small business owner knows about “above board” business costs – things like paying for rent, office equipment, marketing, and hiring employees. Most business owners even recognize some “under the radar” costs like not being paid for vacation days, or having to fund a retirement plan on your own, with no employer providing a pension or matching 401k contributions.

But the “hidden” list goes even deeper than that. Let’s take a look at some of the least obvious costs of running your own shop – and see if they don’t apply to your small business.

  • Paying 100% of your Social Security – In the private sector, employers cover half of your FICA contributions. But as your own boss, funding 100% of your Social Security is part of the deal. Make sure to put aside additional cash toward the government end of your retirement fund.
  • Paying for your own cell phone service – Yes, having to pay for phone service isn’t a big surprise. But having to pay hundreds per month for a full-service cell phone, with the e-mail, text, and web browsing services you need to keep in touch with your clients out of the office can really add up. In the private employer market, many companies pick up the tab for things like cell phones. But entrepreneurs are on their own. Tip: look into your cell phone provider’s service plans. It’s worth an hour to go over every line item with your carrier, and knock that cost down as much as possible. Even so, a good smart phone can cost up to $200, along with $100 or so in monthly charges for all the bells and whistles.
  • Paying for industry association fees – To succeed in the small business world, it really helps to be a joiner. That’s why linking up with good trade associations, hopefully loaded with potential clients, is a great idea. Expect to pay about $200 per association on an annual basis, so join only a few trade groups when you’re first starting out. Then keep costs down by asking around for other good groups to join.
  • Paying for legal services – Every small business needs a good lawyer, though most charge up to $125 per hour. In the corporate world, lawyers are either on staff, or attached to a firm via a retainer deal. But not so for a small business owner. You’ll have to hire your own legal eagle. To cut legal expenses, cover fees up front. The bulk of small business legal costs come from hidden costs, so protect yourself by negotiating a fee upfront, with all costs on the table. Despite conventional wisdom, legal fees and billing schedules are up for negotiation, especially with smaller legal firms.

Other potential “hidden” costs of running your own business include paying for licenses, permits and fees; hiring an accountant or tax advisor, and paying for business insurance. A good rule of thumb is to plan for an additional 20% in revenues to cover all of these hidden business costs. You may have to pare back in other areas, but at least you’ll be covered.

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