There are two main factors that will determine the profitability of your business: the revenue you have going in and the expenses you have going out. Staying in control of the two factors will empower you to operate your business successfully. Additionally, some other factors may also have influences on your business and failed management may result in loss. Here are some ways to manage those major business expenses that impact all types of companies.

 

Let’s begin by focusing on the “expense” side. There are three main factors that have effects on your management.

 

Reducing expenses. This is an idea that may come to mind for most people, when they think about managing expenses. As the saying goes, the less you expend, the more you save. Every dollar you save on expenses is an extra dollar of profit.

 

Forcasting expenses. Monthly or annual budget is important, since it can help you to have an overall forecasting of your expenses. For example, you should be able to predict your advertising costs. Besides, you should project how those costs might change over time. This allows you to keep your cash flow positive and make better sales goals. Ultimately, you can effectively chart the future of your business.

 

Strategically taking on expenses. Managing expenses means taking on other expenses, provided they’re valuable to you. For example, you might invest more money in a new marketing campaign if it promises to return new sales.

 

Tips on How to Control Business Expenses

We will discuss this question by analyzing different categories of expenses.

1. Advertising & Marketing: Your promotional expenses. If you want your business to generate more leads, interest, and brand recognition, you’ll need to invest in marketing and advertising.
2. Wages & Salary: Employee salaries and wages for staff are typically one of the largest business expense categories for most companies. You’ll want to see how much it’s costing your company just to manage it, which can help you develop cost-saving strategies for the future.
3. Business Licenses & Permits: A bar’s liquor license, for example, or other required permits for your industry.
4. Business Insurance: Broadly, this could include business liability insurance, workers’ compensation insurance, and other forms of insurance that protect your business from loss.
5. Charitable Contributions: Do you have a charity collection box near your checkout counter? Maybe you use a company vehicle for volunteering, like holiday meal delivery. You can deduct some of these expenses, but always double-check IRS guidelines.
6. Continuing Education: Conferences, education expenses and other employee training or development. Make sure to record travel and meal expenses separately.
7. Entertainment: As of 2018, business entertainment expenses are no longer tax-deductible. You’ll still want to distinguish them from crossover costs like meals and travel.
8. Health Insurance: This includes insurance premiums you cover for your employees. You might also have self-employed insurance costs.
9. Home Office Deductions: If you work from home as a sole proprietor or LLC, you have some options. You may be able to deduct costs like rent, mortgage interest, repairs or utilities.
10. Interest Payments: Ongoing payments on all credit lines. These include small business loan payments and business credit card expenses.
11. Meals: The IRS scrutinizes business meal expenses closely. Whether it’s a lunch meeting or travel-related meal, you can deduct only 50% of meal costs.
12. Organization Dues: This is important if you’re part of a chamber of commerce or other business association. You can’t deduct fees for hobby groups and social clubs, though.
13. Professional Fees: If you take advantage of services from a certified public accountant (CPA), tax advisor, marketing consultant or other professional, use this category.
14. Office Supplies: Cleaning supplies, water and other monthly office expenses belong here. Using a business credit card for these ongoing costs helps with tracking, too.
15. Rent: Your rental costs for any building you rent for business.
16. Retirement Plans: If 401(k) plans or other funds are part of your employee benefits, list them separately for more accurate tax filing.
17. Taxes: Business property taxes, payroll taxes (also called employment taxes) and more.
18. Technology: It’s worthwhile to separate subscription costs for things like POS software or QuickBooks from office supply costs.
19. Travel Expenses: Another closely examined business expense category. Document business travel that takes you outside city or area limits as well as related costs like airfare, hotels and meals.
20. Utilities: Along with gas, electric and water, don’t forget internet, phone and other utility bills.
21. Vehicle Expenses: Since so many owners use vehicles for business and personal purposes, this is another category to watch. You can handle vehicle deductions two ways. You can calculate the amount using the standard mileage rate option. Or you can use the actual expense option. Actual expenses include all expenses — gas, oil, insurance and more — incurred while using the car for business. To claim depreciation costs for a vehicle, it must be driven for business purposes 50% of the time or more.
22. Website Expenses: Domain fees, web hosting and other costs required to keep your site live.
23. Repairs and Maintenance: If you own anything on behalf of the business, including your own building, your equipment, or personal devices like laptops, you’ll need to set aside money for repairs and maintenance.

Organized business expenses matter.

Organized expenses save businesses significant time on tax filing and improve your chances of saving money.

 

iPeakoin offers a Virtual Card management tool for corporates. Businesses can create cards with customized budgeting for different employees to make payments for business purposes.

 

The card allows employers to place limits on how much cardholders can spend per transaction, per spending category, or overall. Budget managers see what’s spent in real time, and finance teams always have the receipts they need for month-end closing.

 

Everything you need to control company spending and let your teams do their best work, faster. Get started today ipeakoin.com/quantum-virtual-card