More than 25 start-up business expenses every entrepreneur should know

There are many things to consider when starting a business, and cost is one of them. The costs you are incurring now can help you determine whether you need to get funding, when you can achieve break-even, and where you can achieve savings.

Although the average cost of starting a business can be as high as tens of thousands of dollars, many small and micro businesses—especially home businesses—have much lower starting costs.

Here is a list of more than 25 small business expenses (grouped by category), as well as tips for tracking, managing, and reducing costs.

Fixed business expenses

Fixed business expenses are exactly the same; they stay the same every month. These include the administrative expenses of operating a business, such as commercial lease payments, mortgages, property taxes, self-employment taxes, wages, loan payments, and commercial insurance.

Calculate your average fixed cost It can help you understand the cost of operating a business and the area that can be saved.

Fixed fees can be tax-free. For example, you can usually deduct employee salaries, insurance, taxes, interest, and rent.In addition, if you have a home office that is frequently used for commercial purposes (dining tables are not included), you can also apply to deduct related fixed expenses Home office deduction. Please be sure to consult the IRS guidelines Deduct business expenses Or talk to a sales tax consultant.

Variable operating expenses

Every company has monthly or different activity fees. Variable costs include marketing and advertising, inventory, labor, sales commissions, operating mileage, meals and entertainment, gifts, raw materials, maintenance costs, utilities, seasonal employment, and utilities.

If you run a restaurant, retail business, or niche business, your variable expenses may usually be higher.

Neglected business expenses

Always look for tax relief. You may be surprised at what business expenses the IRS allows business owners to write off.

Expenses that are often overlooked include fixed costs, such as health insurance premiums. If you use after-tax dollars (no government subsidies or employer shares) to pay for health insurance entirely out of your pocket, you should plan for these and may be able to apply for tax relief.

Other costs that are often overlooked and are tax-deductible include the mileage generated by driving to a meeting or even going to a store to buy office supplies (check the IRS website for the latest standard mileage rate, which changes every year).

Variable start-up costs, such as business registration fees and registered agent services will also affect your budget and are deductible expenses. In addition, if you cooperate with a third party to help you with legal or accounting matters, you can also write off these expenses.

Is your mobile phone bill an activation fee? Yes, if you mainly use it exclusively for business. However, if you use your mobile phone for personal and commercial purposes, the IRS requires you to share the expenses and only use it for commercial purposes as a tax deduction.

How to calculate startup costs

Now you know the business costs involved in starting a business.The U.S. Small Business Administration (SBA) provides many Resources and tools Can help accomplish these tasks.These include a Profit analysis calculator (Calculate your break-even point), Start-up cost calculator, also Free business consulting.

How to track business expenses

Tracking and managing your expenses will help you keep track of your finances and prepare for the tax season.The first step in doing this is Separate your personal and business finances. Having a designated commercial bank account and credit card makes it easier to record and track your expenses.

It is possible to track expenses through spreadsheets, but this method is difficult to scale and maintain accuracy. On the other hand, investing in accounting software and the services of accountants helps to ensure accurate tracking, correct classification of tax purposes, and report generation.Read more about How to track your small business expenses.

Technology also makes it easier to grasp the receipts and invoices generated by start-up costs.Mobile applications such as Expensed, agree, new book, and QuickBooks Expense Tracker Allows you to scan your paperwork anytime, anywhere, import credit card data, import your expenses into your accounting system, etc.

How to cut business expenses

Once you have a clear understanding of your business expenses, you can find places to cut costs and maximize profit margins.

Check your quarterly business expense report to determine which expenses are critical and which are unnecessary or negotiable. For example, you can reduce inventory costs by setting up automatic reordering when inventory arrives instead of maintaining excess inventory. Also, check with your cell phone operator to see if they can offer a cheaper plan based on usage and the number of your employees.

What is the biggest expense of a small business? In most cases, these will be labor, benefits, and taxes. Solving these costs requires a more proactive approach. But before reducing the number of employees, please consult your tax advisor to find out if you are overpaying taxes. You can also consult an employee benefit broker to help develop a customized benefit plan that meets your employees’ needs while staying within your budget.

Continue to cut until the target budget is reached.Here are some The best way to cut small business expenses.

Fundbox and its affiliates do not provide tax, legal or accounting advice. This material is for reference only and is not intended to be provided and should not be used as a basis for tax, legal or accounting advice. Before conducting any transaction, you should consult your tax, legal and accounting advisors.