You started your business to make money, but what can you do when your expenses start piling up? While business expenses are a necessary cost to running an enterprise, there are ways to reduce your costs.
In this article, you’ll learn about common business expenses and steps you can take to save money overall.
What Are Common Business Expenses?
Every business has different needs and areas of cost, but here’s a list of some common expenses:
- Utilities
- Marketing
- Insurance
- Wages
- Business Travel
- Rent
- Taxes
One of the most commonly discussed costs in the public and private spheres are taxes. Now, you may not be able reduce your office’s rent, but you can use some helpful tools to lower your tax payments.
Tax Reducing Tools
Are you paying too much in taxes? If you’re not taking advantage of every financial tool available to you, then you may be. While taxes play an important role in society, business owners are entitled to certain credits and deductions.
According to NerdWallet, there are over 20 small business tax deductions you could use to your advantage. Some of these deductions include:
- Office supplies
- Employee benefits programs
- Legal and professional fees
Available deductions can also vary from state to state. For example, AAFCPA states:
Massachusetts cannabis businesses can now deduct all of their ordinary and necessary business expenses on their state income tax returns.
AAFCPA, MA Cannabis Reform Bill Signed by Governor
As you can see, this deduction is specific to one industry in one state. You must double check that any deductions you apply to your taxes actually are a good fit for you.
Deductions aren’t the only tool you can use to reduce your costs. Let’s take a look at credits that can minimize your tax payments.
Which Tax Credits are Best for Businesses?
As is the case with deductions, there are many types of tax credits you can use to bolster your business. Tax credits are offered by both the Federal and state governments.
Due to the wide variety of tax credits available, a few are listed here for your review:
- R&D tax credits
- Disabled access credit
- Paid leave credit
- Energy credit
Of course, the tax credits that are applicable to your business will vary, so it’s best to discuss your options with a tax professional.
How Else can a Business Cut Costs?
Taking stock of your spending is a simple way to start cutting costs. Review how much you pay for some of the basics like telecom and waste services. Oftentimes, you can negotiate with your service provider to get a better rate.
If you aren’t sure what a fair rate is or don’t have the time to review these services, you can always hire an outside consultant to run an internal audit for you.
These consultants will often take on the task of negotiating with providers for you or help you find a less expensive service.
How to Reduce Business Expenses in 2024
In a time of rising business costs, it is imperative to know how you can save money. By examining your spending and talking to a tax professional about available tax credits and deductions, you could dramatically reduce your costs.
Get started by reaching out to Bowers R&D Associates today to learn more about R&D credits for your business.