5 Big Money Wasters in Small Businesses
Small business owners work hard to support the long-term success of their company, but many entrepreneurs may be overlooking ways to save money. Identifying potential money wasters can help you reduce your monthly overhead and keep your small business on track. The following are five possible money wasters to consider avoiding.
Entrepreneurs who focus on maintaining a specific number of employees, rather than hiring qualified candidates to support operational weaknesses, may fall victim to overstaffing. Employing more people than necessary can increase your payroll expenses. It can also decrease your productivity. Instead, consider cross-training some of your existing staff to expand their skill sets.
It’s important to be thoughtful about the digital tools and resources you purchase for your small business. For example, a flashy website or digital signage may be suitable for some small businesses, but not others. The technology you invest in should streamline day-to-day activities and provide you more time to focus on your business. Take advantage of existing free platform technologies to market your services or products. There are reputable social media platforms that can help drive your company’s top line revenue.
Expensive Office Space
You should ask yourself how much office space you realistically need. If you’re able to shift your office space into your home, you may be able to reduce your commuting and rent expenses. The Internal Revenue Service (IRS) may also allow you to deduct a percentage of home office costs from your taxable income.
Some small businesses opt to outsource certain day-to-day activities such as managing payroll. Before outsourcing, you should consider whether the cost is worth the extra hours you’d gain to focus on other responsibilities. The benefits of outsourcing can also vary based on your industry. If you run a medical practice, it might make sense to outsource billing. Insurance companies and government health benefit programs often change their billing codes, so by utilizing an expert you could save time and reduce your risk.
Paying Too Much in Taxes
Utilizing a team of tax professionals can help you implement tax saving strategies for your business. For example, an accountant will look for ways to reduce your tax liability long-term instead of just once annually when it’s time to file taxes. You may also be missing opportunities to include certain expenses like business-related travel costs. If your business has equipment or other depreciable assets, depreciation and amortization are a non-cash expenses that can help offset your federal income tax liability.
Investing in Your Small Business
If you have questions about identifying and avoiding money wasters for your small business, PlainsCapital Bank can help. Our experienced banking professionals are equipped with the knowledge, tools, and expertise to help small business owners stay on track. Call us today at 866-762-8392 to learn more.