I am thrilled to present my first guest post from an individual who contacted me through my website – yup, this website right here – the one you’re reading this message on. 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. Without further or due, I present Jim’s first post.
There aren’t many people who love to do math in their spare time. For most, it’s a necessary evil done when it has to be done. When you’re in charge of business expenses (either as an employee or a small business owner), that means you must do math and accounting. It’s necessary to keep your business expenses under control.
Then what happens if you also happen to hate math? Rather than ignore the problem and let those expenses balloon into a huge problem, there are some tips you can use to manage things better. First, it helps to know some of the common problems with business expenses.
Typical Expense Problems
Simply put, business expenses are costs paid for by a business. It can include salaries, insurance, even raw materials. In order to be profitable and pay everyone’s wages, business expenses need to be kept in check. To do that, Inc.com recommends watching for problems in the following areas:
- What items in your inventory that are not selling as well as other products.
- What vendors or suppliers that do not offer discounts or payment terms.
- How much energy you use.
- Whether you need everyone you employ.
- If you use the office supplies you currently have.
- If you have unused space in your business.
Besides looking for problems, you also have to keep an eye on your business finances as a whole. Many businesses overpay or lose funds to banking fees. Even if you’re bad at math, you can check invoices for overcharge mistakes and make sure your bank account doesn’t get hit with an overdraft.
Math Tricks & Tips
As you look through those problem areas, what can you do if you spot something? Inc.com has a great list of tips to help better manage business expenses, such as:
- Make more purchases from the same vendors to get discounts and better prices.
- Politely discuss the competition with your vendors and ask them to make a better offer.
- Train your employees on how to get discounts from vendors and save money (such as turning off lights and limiting waste).
- Try to avoid fixed expenses (costs that you cannot change) and focus instead on variable costs. For example, renting can often be more flexible than buying.
- You also need to worry about your business taxes. The tax code is confusing, and mistakes here can be very costly. Less Accounting has a few tips for business taxes:
- You can deduct equipment expenses to make sure your equipment is up-to-date.
- Travel costs vary on the type. A business meal is often 50% deductible, whereas any entertainment (even to make a client happy) is not.
- If you have a home office, make sure it is physically separate from your living area.
Tips For Home Businesses
Speaking of a home office, more and more people these days are setting up a business out of their home. While this is the American Dream, you really have to keep an eye on the expenses as it affects your home and family as well — even if you’re not the best fan of math.
Redfin explains that a home business needs the right technology. That means making smart purchases. Before heading to the store, ask yourself what devices are absolutely necessary to make your business work. Most need a computer but not all need a high-end printer. You can also manage your home business expenses by investing in refurbished or older technology that still fits your needs.
Don’t Be Intimidated By The Math
Some people try to avoid doing math, but when you’re in charge of business expenses, you don’t have that luxury. Even if you hate math, you can control costs by being smart about your purchases, taxes, and home business expenses. And by improving your expenses, you can improve the whole business.