If you're thinking about starting a business in the year ahead, there are two important numbers you need to know. Americans believe it takes an average of $28,000 to start a business. Current business owners report a median actual startup cost closer to $12,000. That's less than half the imagined number, according to the Entrepreneurship in 2026 report from Intuit QuickBooks.
That disconnect lands in a moment of surging entrepreneurial ambition. One in three U.S. adults (33%) said they planned to start a new business or side hustle in 2026, a 94% jump from the previous year. More telling: Entrepreneurship now ranks as the top wealth-building strategy in the US, outranking traditional savings, investing, or earning more at a traditional job.
Founders are moving fast. More than two-thirds (68%) of prospective business owners feel pressure to move within the year, and 57% say they plan to proceed even if economic conditions aren't ideal. Yet 47% still say money is the single biggest hurdle. When the imagined price of entry is more than double the real one, the number itself becomes the barrier.
Startup costs reality check: Perceived vs. actual expenses
The $28,000 estimate is more than double what actual owners report spending. And the miscalculation cuts deeper: most aspiring founders aren't anywhere near either number. Only 13% of prospective entrepreneurs have most of the money they need to launch, according to the same survey, while one in three (32%) have less than a quarter of it.
Where they expect that cash to come from reveals another hurdle. Most plan to lean on personal savings (66%) or personal credit cards (45%). The $28,000 in their heads isn't a commercial loan application; it's their own bank account. For many, that imagined price tag is high enough to kill the idea before it starts.
Why aspiring founders overestimate startup expenses
That $28,000 figure may assume a traditional brick-and-mortar setup. A business with a lease, build-out costs, physical inventory, and signage, which doesn't always reflect the types of businesses many people are launching today.
The $12,000 median reflects modern entrepreneurship: service-focused, home-based operations built on skills rather than inventory. Consultants, bookkeepers, designers, and freelancers don't share the heavy overhead of storefronts. By anchoring to an outdated mental model, prospective founders risk talking themselves out of ventures they could easily afford to launch today.
The hidden cost of misconceptions: Why money stops nearly half of aspiring founders
Asked what stops them from starting a business, almost half of U.S. respondents (47%) point to money, followed by a fear of financial failure (33%) and trouble accessing credit (24%), according to the Entrepreneurship in 2026 report. But cash is only part of the barrier: 24% cite a lack of time, and 22% point to business acumen. And the hesitation doesn't end at launch.
Among current owners, 35% skipped applying for business funding entirely because they expected to be rejected, according to the Business ownership in 2026 report from Intuit QuickBooks. They weren't turned down, they simply never asked.
That self-rejection cuts unevenly. Black business owners (40%) are more than twice as likely as their white, Hispanic, and Asian peers to believe their race, gender, or age would count against them in a funding decision.
The financial confidence gap beneath the startup cost barrier
More than half (52%) of aspiring entrepreneurs told the same entrepreneurship survey they lack confidence in essential financial tasks: managing cash flow, tracking expenses, invoicing customers, handling taxes. Seven in 10 (71%) say that gap makes it harder to reach their personal financial goals.
Read the two findings together and the barrier looks different. It isn't only that people think they need $28,000. It's that they don't trust themselves to manage it once they have it.
The rise of the side hustle: Why 47% of Americans work outside traditional business structures
Nearly half of all Americans (47%) earned income from a side hustle over the past year, yet only 20% formally registered their work as a business, according to the Entrepreneurship in 2026 report. When traditional startup costs feel out of reach, people bypass them entirely—most skip the bureaucratic scaffolding, operating without expense tracking, invoices, or dedicated business bank accounts.
Americans dedicate an average of 19.5 hours a month to their side hustles, pulling in an average of $2,038 monthly—surpassing both the time and income reported in any other surveyed nation.
Official economic data reflects the same hidden activity. According to the U.S. Census Bureau, 473,679 business applications were filed in August 2025, but just 28,725 are projected to become employer businesses within four quarters. Only a small share of new applications grow into businesses with employees—and a great deal of entrepreneurial activity never files an application at all.
Understanding the “invisible entrepreneur”: Informal businesses and side hustles
Invisible entrepreneurs are doing the day-to-day work of running a business: generating revenue, serving customers, and solving problems, entirely off the official grid. This quiet boom creates a dual reality. Headline business formation figures miss a massive amount of real economic activity, and these founders go without fundamental protections and financial clarity, operating without a clear view of their true earnings, expenses, or tax obligations.
Who's keeping their business on the side
According to How women build businesses in 2026 from Intuit QuickBooks, while 42% of women currently run a side business, just 13% have formally registered it, and only 10% have secured an Employer Identification Number (EIN).
For most of these founders, remaining informal is an intentional strategy rather than a temporary delay, with 58% planning to keep their venture as a secondary income stream. The driving factors are largely practical: 41% rely on their day jobs for health insurance and essential benefits.
How AI is trimming startup costs
The cost of starting a business keeps falling largely because a growing share of early groundwork can now be done for free or with fewer costs. Nearly two-thirds (65%) of aspiring U.S. business owners plan to use AI to help launch their venture, according to the Entrepreneurship in 2026 report, with 31% saying they are very likely to do so. That's at least five points higher than any other surveyed country. Only 16% rule out AI entirely.
Entrepreneurs plan to use AI across line items that once required a dedicated budget: brainstorming and market research, building websites or product listings, and developing names, logos, and branding.
While roughly seven in ten businesses use AI regularly, only about one in ten pay for a dedicated, standalone tool, according to the 2026 AI Impact Report from Intuit QuickBooks. Most founders remain in the free, experimental phase. Regular U.S. business adoption rose from 48% to 77% between July 2024 and January 2026.
Early adopters report tangible results: 29% of U.S. businesses using AI say it reduced their costs (versus 17% who report increases), 43% report higher revenue (against 2% who report a decline), and 78% point to improved productivity—up from 46% when tracking began.
Freedom over fortune: What modern entrepreneurs actually want from business ownership
Ownership exacts a price that never shows up in a startup budget. Eight in 10 owners (82%) made significant personal sacrifices in the past year, and more than half (54%) skipped or reduced their own pay at least once to keep bills or payroll covered, according to the Business ownership in 2026 report. So if money isn't the point, what is?
The largest share of owners (35%) define success as reaching a point where the business runs profitably without them, according to the Business ownership in 2026 report, while selling the business for a life-changing sum ranks last at 8%.
Instead, founders are most likely to describe their venture as a calling or life's passion (42%), outpacing financial security (36%). Most are forging ahead without a family template: 61% are first-generation entrepreneurs. For the 39% who grew up with a business-owning parent, the most enduring advantage wasn't capital or connections—it was simply the confidence to start.
That ambition frequently points outward. Three in four owners (76%) plan to strengthen their local communities over the next five years, with job creation leading the way as 41% plan to hire local residents.
Key Takeaways: What aspiring founders need to know for the year ahead
- Starting costs less than you think. The gap between the imagined $28,000 and the actual $12,000 median is the most fixable problem. It's a perception issue, and perception responds to information. The businesses with the lowest startup costs are typically service-based, ones where skills, time, and a laptop are the main ingredients.
- Sustaining costs more than you think. The barrier doesn't vanish once you're in. It moves from a single upfront check to cash flow, hours, and the 54% of owners who have skipped their own paycheck to cover someone else's.
- The advantage isn't capital. The people best positioned to start a business aren't the ones with the most money. They're the ones who priced the idea honestly, tested it before spending, and know what the first year actually costs.
Methodology
- Entrepreneurship in 2026: online survey of 3,000 US adults aged 18+, plus 1,500 adults each in Canada, the UK, and Australia, commissioned by Intuit QuickBooks in December 2025. Results re-weighted using post-stratification. Fielded via Pollfish; respondents remunerated.
- Business ownership in 2026: online survey of 1,305 US business owners commissioned in December 2025. Respondents were adults 18+ who identified as sole owner, co-owner, or co-founder of a business with 0–250 employees. Credibility interval ±2.7 points at 95%. Fielded via Prodege.
- 2026 AI Impact Report: survey of 34,364 owners and operators of small-to-midsize businesses across seven quarterly waves between July 2024 and January 2026, combined with anonymized administrative data from 5,335,000 businesses using Intuit products between 2021 and 2025. Methodology developed by an international team of economists led by Ufuk Akcigit, University of Chicago.
- Business formation figures: US Census Bureau Business Formation Statistics, August 2025.
This story was produced by Intuit QuickBooks and reviewed and distributed by Stacker.