If you run a small business then there’s a high chance that you will be working with a very small margin, in terms of your profit and cash flow. You might not be able to afford to let your costs spiral out of control, and this is understandable.
That being said, you must stick to your projected costs as much as possible. Managing your expenses is the best way for you to do this. Take a look below to find out more.
Image Credit: Pexels (CC0 License)
Understand what Expenses are Allowable
The first thing that you need to do is understand which expenses are allowable. You can claim for any costs that you might incur, for the sole purpose of your business.
Costs may well include fuel, motor costs, equipment, uniforms, premises and more.
Even if you and your staff work from home, there are many eligible expenses you can claim.
This could well include the cost of any goods you have to buy to make your sales. If you manufacture glass-to-hermetic seals, for example, you would be able to claim for things like ceramic composite. Whereas, if you were creating digital products, you would be claiming the apps and equipment required to get the job done.
Keep Track of Things
You will likely incur quite a lot of costs before you officially open your business. It’s your job to make sure that you keep a record of your expenses as this will help you to claim them back at a later date. They will help you to reduce the amount of tax you pay.
Remember that you can’t claim for things like personal expenses, such as general clothing but you can claim for a part of it if it is for business purposes.
You must try and control your expenses if you can. This is especially the case if you know that your cash flow is tight. You may find that you have to delay buying new equipment and that you have to make do with second-hand gear to start with.
Either way, you have to make sure that you set a clearly thought-out budget and forecast your anticipated sales to monitor everything accordingly.
If you have employees make sure that you tell them what you will and what you will not pay for. This will stop things from getting out of control.
Use an App
The best thing about using an app is that it gives you the chance to record your expenses when you are on the go. This means that you are not likely to lose out on things you can claim.
The great thing about using an app when you are first starting your business is that you get a high level of functionality, saving you time, hassle, and money.
You can also run reports so you can find out what you are spending, and why. This will help you to cut down on costs for notoriously high expenses.