Effective management of expenses is one of the key aspects of business management and every business – big and small – should be aware of its expenses. In fact, a business idea that sounds great in the head is considered viable only if it has the potential to “pay” for its own expenses!
As a business owner, having knowledge about the types of expenses incurred by a business will help you in successful budgeting and tax planning. So, let’s go ahead and look at the 5 key types of business expenses you should know about. These are very basic and common for every business.
1] Location expenses
Every business needs a place to operate from, which makes location expenses pretty much unavoidable. So, whether it’s a mortgaged property you run your business in or a rented place, you need to shell out a fixed amount towards it every month. If you own the place, then this expense might not be considered. When you set up a business, you also need to consider the cost of purchasing listed property (which is to be used for business purposes) as a one-time expense.
2] Utilities
Utilities include the electricity bills, telephone bills, Internet/Wifi charges, and even gas bills. The expense on utilities is basically another unavoidable cost and so the smart way is to learn how to cut down on these expenses.
3] Maintenance
This category can be really broad and includes everything from costs incurred in maintenance of the office infrastructure and cleanliness of the premises to maintenance of equipment and appliances used. The cost incurred in troubleshooting and repairing also comes under this.
So, whether you plan to carry out the maintenance yourself or wish to outsource it to a firm, you should look out for unnecessary expenses. Seek the help of an accounting firm or bookkeeping services provider to calculate the exact expenses for your business.
4] Insurance
Insurance expenses are something no business can do without and there are different types of insurance. To begin with, there is liability or casualty insurance that covers unexpected disasters or accidents that lead to loss of life and/or property. Then there are other types of insurance, such as disability insurance for employees and employee medical insurance. You should plan carefully to make a list of insurance types that are really necessary for your business.
5] Employee salary and benefits
If you are running a business, you’re likely to have employees working for you. You need to consider their salaries, perks and employee benefits as part of your expenses. Payroll taxes also add up your total expenses.
In addition to the ones mentioned above, there are many miscellaneous expenses. Seeking the help of a local accountant who offers bookkeeping & tax services isrecommended to manage your business expenses effectively. If you are in Birmingham get in touch with Barron & Co. Ltd accountancy firm for qualified Chartered Certified Accountants who can help you save money on your business. Give us a call on 0121 274 9108.