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August 2008
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Business Expenses – What Every Business Must Endure!

There are two ways to make more money in your home business — increase sales or reduce expenses.  Both sales and expenses will determine the total year end profit.  Because business expenses are more controlable than sales (can’t guarantee any dollar amount from sales), let’s look at your total home office operation with “reduce expenses” in mind.

Buying used furniture rather than new is a great “one time” savings, but we’re talking about day after day expense reduction.

** If your business calls for the use of money orders, do you run to the nearest convenience store and pay $1.75 per money order when you could get them from your bank at no cost?  Add $1.75 per money order times the number you’d use in a month’s time and you’ll know immediately how much money you’d save!

** Be sure to keep track of all “business” miles for income tax purposes.  even if you’re just going to the office supply store and bank, those miles add up by the end of the year.  The current .42 per mile deduction that IRS allows can mean a BIG deduction for you.  We suggest you get a pocket calendar, keep it in your vehicle, and on a DAILY basis write the business miles and where you went.  At the end of the year, add up all the miles to use for an income tax deduction.  The pocket calendar then becomes part of your tax records.

** Learn to re-use and recycle as many of your office supplies as possible.  File folders can be reused simply by putting a new self-adhesive label over the old label.  Scrap 8 1/2″ x 11″ paper can be used for first drafts of letters or sales material.  Old index cards or prospect cards can be used for notes.  Never throw away the paper clips from flyers or incoming mail – they also can be reused.  Over a period of time the savings can be substantial by thinking of other ways to reuse and recycle.

**Get a receipt from every store where you buy supplies for your business.  These are to be kept in a box or manila folder for year end taxes.  Even if you’ve gotten just a couple stamps at the Post Office, GET A RECEIPT — you’ll be surprised at how much these will add up to at the end of the year.

** If you are in an area where you must drive on a toll bridge – be sure to get a receipt each time you cross.  Even though this may only cost you a couple bucks today, the year end total could be $50 or $100 or more that can be used as a tax deduction.

**Remember the worst enemies of a computer include smoke, heat, dust and static electricity charges, and most of all — FOOD or LIQUID!  DO NOT EAT around the computer!  Bits and crumbs of food that fall between the keys of the keyboard will eventually cause it to quit working.  If you spill soda or juice on the keyboard, it will dry “sticky” and you have about a 50% chance of the keyboard working after it dries.  Reduce the possible major expense of buying new computer parts – eat at the dining room table!

** When you get to the point that you cannot do the work yourself, instead of hiring a full-time or even part-time employee, go to a temporary employment agency such as Manpower or Kelly.  Using this method of getting outside help you’re only obligated for 4 hours’ work from the employee rather than “finding” work every day for a permanent person once you get caught up.  We find that getting a temporary person once a week to do the filing and even typing names and addresses into the computer frees up our time so we can be marketing our products.  By using this method of getting outside help, you won’t have to be responsible for payroll taxes on the employee – the temporary employment service handles all of that.

** Depending on the type of home business you have, given the gas prices these days, would it be possible to do deliveries and/or run errands perhaps two or three days a week rather than running out every day of the week?  By doing all the “running” two days a week, you’ll be surprised first at how much less gas you’ll be using, and secondly, how much more time you’ll have to actually be making samples of your products, sewing garments or completing those alterations.

Business expenses are those things we don’t like to talk about, and don’t like very much, but nevertheless are a big part of our home businesses.  The more we can do to reduce those expenses, the more end profit we’ll have – and bottom line profit is the name of the game in any type of business!


 


 

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Pattern Maker, Instructor & Author

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