As we get nearer to the end of the year, many small business owners start to think of last-minute business expenses they can deduct on their business income taxes.
While taxes — even deductions on them — is not exactly a fun thing to think about. However, finding ways to cut taxes seems to be a part of growing your business and increasing revenue.
That said, many don’t realize that cutting business costs and operating expenses is actually a better way to save money and ensure that more of your money stays in your business or can be put toward paying yourself a wage.
This is because when you deduct business expenses from your taxes, you are only saving yourself a certain percentage of a dollar for every dollar you deduct. The exact percentage you save on your taxes for every dollar spent depends on what tax bracket you are in.
Bottom line, if you really want to save money for your business, you need to find ways to keep business expenses from creeping up over time. Here are 5 ways you can monitor and lower your business expenses:
Set up a budget.
A budget is crucial for every individual and business to achieve financial success. Creating and keeping a budget lets you see what you have coming in and what you have going out. Without a budget, it isn’t as easy to tell when you are overspending. A budget can also help you find errors in accounting too.
By making a business budget and tracking spending, you’ll be able to see if your business expenses are holding steady or if business expenses are creeping up over time.
The biggest help for you and your business concerning a budget is to stop resisting it — and just make one.
Reuse and recycle what you can.
In business and in life, one way to save money is to use what you have until it is gone. For example, if you over-ordered paper, use that inventory up before ordering more.
Another example would be to use something up even if it’s not your “favorite” product. You might have ordered a new style of ink pen, but if you don’t like it as well as the ones you normally get, use it up anyway! There’s no sense in wasting things you’ve already paid for.
Ask about discounts for automatic payments or annual payments.
Some business expenses might be the same amount every month no matter what. For items like these, it doesn’t hurt to ask if you can get a discount for setting up automatic payments. This way you won’t have to remember to pay these expenses manually every month, and you might be able to save yourself money on stamps if you usually mail in a payment by check.
Another idea to consider is asking for a discount for annual pre-payment. Many services like insurance or even some social media tools will offer a discount if you pay annually instead of monthly. These are also the type of bills to look at negotiating to help cut costs.
Re-evaluate expenses yearly.
By taking a good look at the year’s expenses as you prepare your taxes, you can see where your business can cut back and if anything in your budget needs to be increased. This is also a good time to look at contracted services to see if you are getting the value you are paying for.
If you think your contracted services are getting too expensive or if you are no longer pleased with the service you are receiving, shop around. Your customers and clients do the same thing before hiring you, so it isn’t a bad thing to do. It’s also a good idea to get a current quote from your contractors or other service providers in case you can get a discount or better pricing for customer loyalty.
As a business owner it’s your job to make sure your business stays profitable. If you aren’t diligent about your record keeping, your business expenses could be creeping up on you — unnoticed. The more you watch your business expenses, the better you can grow your business and set it up to be profitable for the long-term.