Financial overspending is one of the major traps new businesses fall into that cause them to close their doors after only a short amount of time. Even if your business is established and successful, you still want to be on the lookout for overspending and curb it as much as you can. Watch out for these three ways your company might be spending more than what it should.
1. Energy Consumption
Many, many things in your office might be costing you a lot in energy consumption. Everything from windows that leak air to printers that are used far too much can cause you to spend a lot more money than you should. Light fixtures, refrigerators, copiers… anything that could be replaced with a more energy efficient option can save significant amounts of money annually. Another great thing about green upgrades is that your business can take advantage of tax incentives. If you ever do a remodel or move to a new building, look to add energy efficient fixtures such as newer windows and doors, better insulation and more.
2. Maintaining a Company Vehicle
Many companies maintain one or more vehicles for business purposes. However, in some cases, it might not be the most cost-effective option, and you may be spending money on a vehicle you really don’t need. Owning a vehicle requires insurance, license renewal fees, gasoline costs and more. Renting a vehicle when needed can, in many cases, be cheaper and adequately cover the needs of the business, so add up the costs and see which option would be better suited to your company.
3. Overpaying Taxes
Businesses typically have to pay estimated taxes quarterly. Yes, your business will get a refund at the end of the year if you’ve paid too much, but that’s money you could have used to grow your business in the meantime. You can also overpay taxes by having registered your business as an unideal entity. For example, registering as an S-Corp instead of a sole proprietor allows you to segregate costs and avoid the hefty self-employment tax.
As a business owner, it’s one of your responsibilities to work with your financial advisers to have solid budgets and determine where the company might be spending more money than it needs to. If your business is doing any of the above, you might very well be able to cut costs by eliminating some of these items. You may be able to save a lot more money than you think!