Keeping track of your business expense is not an option but obligation if you want to run your business smoothly. Sure it is not the most practical thing to do but it is crucial because it can make your working lives easier indeed. This relates directly to your financial business so you can prevent your business from overspending or potential troubles in the future. Of course every business may have different expenses. However, there are common expenses that every type of business must pay. It is important that you prove that your business expenses are legitimate so you can deduct them on your business tax return.
Common business expenses to know
In order to keep everything in check, you need to make sure keeping everything recorded through documentation. This will help your business expense to stay on track not out of the line since finance is crucial factor for your business to keep going. Here are some common expenses every business must pay you need to know.
One of the most common expenses of business is location cost. It includes mortgage, home business location, building lease, etc. It may sound simple but it is necessary to list them and have them recorded through proper documentation. Location cost also includes phone, utilities, and computer expenses. In fact, you also should include your cell phone and computer internet lines into your location cost list.
You also need to budget the cost of essential expenses such as machinery, equipment, and furniture. If you can deduct the expense then it is better. You don’t have to purchase fancy furniture to complete your office. Just make sure you buy furniture with durability and quality that will let them last longer than a year.
Maintenance expenses are surely common for any type of business and you have to budget it properly. It includes maintenance cost of equipment, facility, and building in general. However, you will still have to pay for other kind of maintenance such as snow removal, mowing, etc.
Salaries, wages, taxes, and benefits are also expenses that your business must pay. You should pay your employees according to the payroll system. And it includes their benefits and payroll taxes. This system may be a bit complicated especially when you are a beginner in running your own business. However, you can also look for a payroll company to handle this.
Supplies expenses should be included into your business monthly expense because you will probably need to replenish it. The supplies include materials and office you need to support your business.
Next important business expense that you should budget is marketing cost. Advertising your business using marketing strategies and tools can cost a lot especially when you do it regularly. It should be included into monthly business expenses. Promotion activities and social media marketing requires money. Your website also requires regular maintenance which cost money as well. Thus, you need to budget these expenses and if possible, deduct them to keep your financial setting in balance.