by: Jim McKinley of MoneyWithJim.org
Starting a new business is exciting, but don’t let it cloud the fact that you’ll encounter monthly business expenses. There’s the mortgage if you own a building, utilities, supplies, tax expenses, and marketing costs, just to name a few. It all adds up quickly, leaving you wondering how in the world you can stay on top of it so that your business doesn’t go belly up before it gets off the ground. While a business certainly comes with its fair share of expenses, there are several cost-saving tips to keep in mind to keep expenses down.
Know Your Deductions
Although you are self-employed, taxes are still a necessary evil. To avoid the stress of tax season, make sure you are thoroughly prepared and organized by digitizing receipts, keeping detailed notes of travel and car expenses, and making use of free accounting software so that you know where you stand. Be sure to keep personal and business accounts separate to avoid confusion. Taxes can be a little overwhelming, which is why it is best to hire a professional. While a tax preparer charges a fee, this is one of the many tax deductions you can take advantage of. Examples of such deductions include business expenses such as vehicle expenses, home office deductions, internet/phone service, and half of the self-employment tax. Any and all deductions help, so know your options.
Save on Equipment
Let’s face it, business equipment is expensive, but there are some things you need for your business to run smoothly. Before you drain your wallet, consider cost-saving options to get the equipment you need for less. Instead of a costly phone bill, use VoIP (voice over Internet protocol), a service that enables you to make calls over the internet and ditch the landline. When it comes to software, go cloud-based so that you can easily update without having to purchase the software/hardware again. At Office Depot, you can easily take advantage of coupons and deals.
If the energy bill has you cringing each month, it’s time to look into ways to reduce energy costs, and it’s actually quite simple. For starters, turn off all lights and put all equipment in sleep mode when they aren’t in use so you aren’t paying for energy you aren’t using. Replace light bulbs with energy-efficient ones to save up to a dollar each month on the electricity bill, but use natural light whenever possible. Another area of high cost is heating and cooling, but you can lower your power usage by 10 percent by keeping the thermostat set one degree cooler or warmer in the winter and summer months. Make sure your HVAC system is in good working order too by having it inspected and cleaned, as well as staying on top of changing those filters so that the system isn’t going into overdrive to maintain the right temperature.
Utilize Social Media
Social media is one of those things that most people interact with on a daily basis, making it an easy (and free) way to interact with customers and market your business. A marketing campaign can be costly, but when your business is first gaining traction, social media marketing is a good way to go. Not only is it free, but it is also a way to increase word-of-mouth, keep customers/clients informed, provide feedback and customer service, and drive traffic to your business website. There are plenty of social media platforms to utilize, with the most popular being Facebook, YouTube, Instagram, and Twitter. Once you get the hang of it, consider paid social media advertising options to expand your reach.
Running a business takes hard work and dedication, but there’s a capital requirement too. However, don’t let business expenses drain you before you have a chance to truly experience the world of entrepreneurship. Implement cost-saving strategies such as taking tax deductions, conserving energy, finding deals on equipment, and using social media marketing to lower your expenses and heighten your chances of success.
Jim is a retired banker with almost 30 years of experience. He created MoneywithJim to share his advice and other resources on a variety of financial topics.