27 Monthly Business Bills and Expenses
Before starting a business it’s important to get an idea of the expenses you could encounter. It’s also essential to study your expenses and manage them accordingly. Below are 27 monthly business expenses to consider.
1. Rent, Lease, and Mortgage Payments
You will have to make sure these are paid on time, or you could damage your credit or relationship with your landlord.
Regarding tax deductions, rent and lease expenses are legitimate tax write-offs. As well as the interest portion for the mortgage on any business property.
You could set up your budget so you are a few days ahead to avoid falling behind. It also gives you more time if you’re in a financial bind.
2. Loan Payments and Interest
Many businesses start with debt. As mentioned above, with lease and rent, you want to ensure your loans are paid on time to avoid penalties and to ensure your credit rating is in good shape. Also, keep in mind the interest on your loans are a tax deduction.
It’s important to ensure you have a strong payroll fund. If you miss payroll even once, your workforce will start to question the stability of your business, and you could start to see high employee turnover.
4. Payroll Taxes
In addition to making payroll, you must budget for payroll taxes that must be paid. Therefore, Falling behind will cause you a lot of problems. In addition, once you fall behind, it won’t be easy to catch up.
Think of any tax you collect as someone else’s money you are keeping safe. When you set a strong policy against using it, you won’t be tempted when you know it’s just sitting there waiting to be collected.
5. Employee Benefits
As you can see from the above, there are more expenses to pay when hiring. It’s not just the employee’s salary; you also have taxes and other expenses such as benefits. Make sure you have included the costs in your budget. The last thing you need is an employee denied a claim because you didn’t pay their premium.
Whether you’re using cell phones or landlines, you’ll need to budget for those monthly communication bills. With a small workforce, you may not need as many lines as a large one. You’ll need to look for a cost-effective system.
Especially with many employees possessing a company cell phone and data plan, it can be quite expensive. However, keep in mind expenses towards communications are tax-deductible.
7. Internet Access
High-speed internet access is a must for many businesses. Especially companies with a high dependency on the internet. In addition, a large workforce requires enough bandwidth to keep your employees working at optimum levels.
Internet access for business is a tax deduction that you want to take advantage of.
The electrical energy you use for your business can be an expense you have to budget for, depending on the size of your business.
For example, a huge warehouse uses a lot more energy than the power used to run an office. The energy used to run your business is a tax deduction.
9. Natural Gas
Natural gas is another energy expense that you must consider if your business uses it. The expense you have for your natural gas usage is another tax deduction to keep in mind.
10. Water Usage and Sewer Expenses
You pay water usage and sewer expenses for your home, which may not be a huge bill. However, this expense can be substantial for a large business. So, again, your water and sewage expenses are a tax deduction for your business.
11. Trash Pickup
Trash pickup and waste management is another business expense that is easy to take for granted. Suppose you operate a factory, then this is certainly an expanse you’ll need to budget for. On the other hand, if you run your business out of a small office, your trash pickup could be included in your property taxes.
12. Municipal Taxes
Depending on how your business is set up, you may have Municipal taxes that you must pay. As with other government-related taxes, this is another one of those expenses you don’t want to get behind on.
13. Property Taxes
If your business owns the property, you have to budget for property taxes paid yearly.
If you lease or rent a business, make sure it’s clear in the agreement whether you’re paying the property tax or the landowner takes care of it. You don’t want a surprise tax bill that you weren’t anticipating.
14. Office Supplies
Office supplies may seem like a small area to look at, but it can add up from a few bucks to a few hundred dollars. Unfortunately, it’s those little things that can add up and go unnoticed.
15. Cleaning Supplies
Cleaning supplies are another area where many business owners may not pay a lot of attention to. Still, cleaning supplies like office supplies are another expense that can go unnoticed and add up, especially for larger businesses.
16. Marketing and Advertising
Marketing and advertising are an important part of any business, and it’s an ongoing expense that keeps the business going. The key to good marketing is tracking results and doing more of what works and less of what doesn’t.
17. Website Hosting and Maintenance
Your monthly cost may range from a few dollars to thousands, depending on your hosting needs.
A business that depends on its website will need a high-end account or a dedicated server. Website maintenance is also something that needs attention and a budget.
18. Vehicle Expenses
A company that owns vehicles must have a budget for fuel, maintenance, repairs, insurance, etc. You’ll also want to plan how many years you plan to keep them and what it will cost to replace them when the time comes.
You can also look at leasing vs. buying company vehicles.
19. Travel Expenses
A personal vehicle used for business purposes is usually paid by the mile, covering fuel, maintenance, and usage.
Ensure you are documenting travel expenses such as flights, train, buses, cabs, etc., so that you can use them as a tax deduction.
20. Business Equipment – Leases & Loans
Whether you lease or buy your equipment, you may need to set aside a portion of your budget for the payments that must be paid on time.
21. Bookkeeping Fees
If you plan to outsource your accounting, you need to use a bookkeeper or an accountant. These fees are something you will want to budget for since they can be significant.
Another alternative is to hire an employee to keep the records that you can submit to an accountant or hire an employee with accounting experience. If this is the route you want to take, then your expense would fall under salaries.
22. Professional Fees
Business owners will need professionals such as lawyers, consultants, accountants, industry specialists, etc. These fees can be anywhere from a few hundred dollars to thousands of dollars. Which is worth it when the professional can solve your problem.
Insurance is a crucial part of operating any business. However, running a business without enough or the right insurance can have catastrophic effects on your company.
The type of insurance you want to consider includes; property, casualty, liability, interruption, disability, and malpractice insurance.
You’ll want to discuss your needs with a competent insurance agent that can help you get the right coverage for your operation.
24. Petty Cash
Your petty cash fund is for that small expense that you don’t put on a credit card. These can include office supplies, coffee for a meeting, small employee expenses, etc.
When it comes to petty cash, you should have a fund set aside and document each receipt for tax deductions.
25. Shipping Costs
If your business deals with a lot of shipping, you’ll need to create a budget for your shipping costs.
You can also look for volume discounts when you shop around. Naturally, you want the fastest service with the best pricing to get your products to your customers.
26. Food and Entertainment
When you take clients out for a night on the town or have business meetings, you can use these as tax deductions. Rember to document the client’s name and the purpose of the meeting just in case you get audited by the IRS.
If you have many clients you wine and dine, you’ll want to have this expense set up in your budget.
27. Miscellaneous Cost
You’ll also have Miscellaneous costs that aren’t mentioned in the above lists. It may be something relative to your business, and when it’s an ongoing cost, you’ll want to budget for it.
You can break down the above list into more categories. Not all apply to every business, and other companies have additional expenses and payments.
Related Expenditures To Keep in Mind
Since sales tax is money you collect, it’s not really an expense, but you have to deduct and pay to the government. So you don’t want to get it mixed up with your revenue.
Capital expenditures refer to funds that improve your business, such as expansions, a large purchase of new equipment, purchasing vehicles. Capital expenses don’t fall under monthly expenses, but they could fall under a loan that has to be paid back with manageable monthly payments.
If you have a business that sells products, your inventory is something you need to budget for. Without an inventory, you can’t make sales. Even though you make money from your inventory
2 Tips For Dealing With Monthly Business Expenses
1. Review Your Expenses
It’s always a good business practice to review your monthly expenses, so costs don’t go undetected.
Imagine paying $39 a month for a service that you no longer use. Imagine this going on for five years. That’s $2,340 for something that was never used.
2. Look for Areas To Cut Costs
Another important aspect of reviewing your monthly expenses is identifying areas where you can cut costs without sacrificing quality or productivity.
Keeping costs down is an essential part of keeping your business moving in the right direction. In addition, a profitable, well-managed company will help you stay in business when the economy is weak.
The key to managing the finances of a business is to budget your operating funds. With many monthly expenses, it’s easy to overspend. Imagine overspending by a few thousand dollars every month. In a few months, you’ll find yourself in so much debt that it will be hard to recover.
On the other hand, if you don’t invest in your business and build your bank account, you could miss many opportunities.
When you use a budget, you can keep a close eye on what’s going on with your finances.