For a business to run effectively, it must accrue some costs or expenses. To make it simple, business expenses are the daily costs of operating your company. This might include conventional utilities to employee wages. After knowing your company’s expenses, the finance department can create a more accurate budget and/or look for a way to reduce some costs if needed.
Business expenses will also be a part of your income statement, it will be deducted from revenue to determine the company’s net income. To conclude, if you want to calculate your final net profit –you must know first hand about the business expenses. Not only that, knowing your business expenses will also help to know which expenses are deductible to the company’s tax liability.
In this article, we will explain 10 common business expenses that companies need to expect for each month to come!
Location cost will be the cost of your office building. It could be in the form of a mortgage if you own the building, or lease payments. Leasing your office could be paid on a monthly or yearly basis, depending on your lease agreement. Location costs usually will stay the same for a long time, it is very rare for this type of expense to suddenly rise.
Water, electricity, phone, and internet are an example of regular utilities for an office. Depending on the utilities, some of these costs can change each month, and some will stay the same for a long set period. For example, water, phone, and electricity bills will cost differently each month. While internet expenses will stay the same depending on the services that you choose from the provider.
A company might have insurance to cover areas such as life insurance for employees, property insurance for the building (which usually also cover its equipment), liability coverage, and others.
Computers, printers, desks, chairs, and office supplies are some examples of office equipment. This may also comprise other things, depending on the business industry. Companies might need to buy office equipment, because of many factors. Though it is not an expense which your business needs to pay each month, it is still important to budget for this just in case.
Payroll expenses, such as employee wages and benefits, must be covered by the companies. You can also include the costs of hiring freelancers or other contracted workers if your company does so, in this section.
Effective and efficient marketing could help to promote the company even more. Marketing expenses are important to budget beforehand, because the expenses might vary depending on each period. Usually, marketing costs could be higher if there is an event or campaign going on. Marketing expenses may include:
● Marketing campaigns
● Flyers and collaterals
● Event sponsorships
● Print ads, radio ads, newspapers or magazines ads
Every business has to pay taxes to the state and/or federal governments. You need to develop a budget and income sheet to determine its costs and how frequently it needs to be paid. Your industry and state laws will determine what kind of taxes you should pay, but it mainly consists of state income tax, property tax, and payroll tax
Sometimes businesses might provide educational opportunities in the form of workshops, conferences, or subscriptions to publications, for their employees. This is a way for the company to boost employee skills and retain staff.
Legal and professional fees
For it to work smoothly the company might need to hire a lawyer or an accountant. It’s crucial to budget for these expenses because most of the time their service will be very important for the company, thus the company needs them on their back and call.
Maintenance and others
A maintenance fee is a cost that might be associated with your business which aims to improve the condition of your office. Cleaning your office regularly could also be included as a maintenance fee. If you do not have in-house staff to do the cleaning, it will be great if you hire an office cleaning service provider.
To make sure that all your employees have a comfortable and healthy workplace, it is advised that you hire them a minimum once a week. Office cleaning rates are varied depending on the provider and also the type of services you choose. Deep cleaning might be more expensive than regular cleaning. Choose the kind of services that your office needs the most.
These are the 10 common business expenses that companies need to expect every month. By knowing this basic information, it will be very useful for anyone who just started their company or others who are about to kickstart their plan of building a business. So, good luck!