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The thought of getting your business expenses in order may seem like an overwhelming task. But by making small changes you can soon see how you can make some sizeable savings.
One key thing, according to business consultant Alessandro des Dorides, is to take time to regularly reflect on how your business is going – especially if you recently set it up. Over time you will make big savings and enjoy more success.
Keep personal and business accounts separate
- Bank accounts – For most things, it can be easy to keep your finances apart. While you may not want to pay fees for a business bank account each month it does keep things more official when someone asks for your payment details, rather than constantly trying to work out what is ‘yours’ to spend from a personal account.
- Claiming allowances for a home office – You can deduct costs for things like heating, electricity and repairs concerning rooms where you work at home. Obviously, this involves getting a bill out, dividing the cost by the number of rooms you have – so it can seem like a bit of a faff but it’s worth it for the savings over a year.
- Mileage – If you use a personal vehicle for business, keep track of the miles travelled as well as all other vehicle-related expenses. You can right off tax for things like car insurance and MOTs. But you will need to know how much of the travelling was for personal use.
Keep good records
If you’re going to be filling in a tax return then you’ll need to know exactly what you’ve spent, so keeping a record of everything you buy is essential. If you for example, get a taxi and there’s no receipt available, you’ll need to handwrite a note including the date, business reason, price paid and the driver you used.
One quick way to do this is by using accounting software such as Quickbooks. It’s so easy to snap photos of your receipts, send and track invoices or categorise expenses on the go. The amount of time you’ll save will be worth it when April comes around.
Use categories for keeping receipts
If you do prefer a manual approach for expenses, use categories to make sure your money is consistently going to the right places.
If you put car parking tickets into ‘travel’, keep them there – don’t then decided a category for motoring would be more appropriate. It means you won’t be able to see if a certain cost is mounting up. It may be time to ditch the car and use public transport instead.
Know when to review your business plan
In today’s uncertain times – with Coronavirus a great example – your business may be trying to stay afloat. Your business may change to keep going and you need a business plan change to keep up. Here’s when to make a change:
- Revenue decreases or increases: Any time you notice changes in your revenue stream or overall operating costs.
- Don’t meet projected earnings: If you’re falling short, tweak you plan to better reflect your business and the market.
- Morale is low: If employees have slumped, it’s time to re-evaluate.