Money Saving Strategies for Your Business
September 5, 2019
Review Employee Benefits
You may bolster payments for certain employee fringe benefits (health insurance premiums, educational assistance and transportation costs, for example) to reduce taxable income and strengthen employee loyalty. Tax-deductible employer contributions to retirement plans can also generate tax benefits for your company.
Investigate Equipment Costs
Examine phone usage. Can you get by with fewer phone lines or a cheaper plan? Study office equipment lease contracts. Would it make sense to buy that printer instead of leasing? Remember to be selective in your cost deliberations. Beware of cutting muscle – costs that contribute to revenue – instead of fat.
Pushing off revenue to next year may make sense for some businesses. Consider postponing invoices for work done late in the year. Invoicing in January instead of December can lower current-year profits, effectively reducing this year’s tax liability. But monitor cash flow carefully so you’re not strapped for dollars at year-end.
Focus on Variable Costs
You may reduce fixed costs by moving to a less expensive manufacturing facility, but in some cases fixed expenses depend on factors outside of your control. On the other hand, you might consider cutting back on a specific variable cost (such as advertising expense or sales commissions) in response to changing conditions in the marketplace.
Negotiate for Lower Rent
If your business is located in an area with unoccupied office buildings, you may enjoy a strong bargaining position. Open up negotiations, especially if you’re nearing the end of a lease term.
Sublet Office Space
If your current landlord agrees and lease terms allow, set aside space for a rent-paying partner or another company. Just be sure to consider possible ramifications, including future needs for that space.
Reduce Storage Costs
If goods have been sitting on your shelves for years, it may be time to sell, donate or otherwise dispose of them. All the costs associated with storing unused or obsolete inventory (like insurance, spoilage, interest and taxes) can eat up your budget in a hurry.
If you have clients who fail to make payments when due, write off uncollectible accounts to increase this year’s business expense deduction. Also consider accelerating depreciation on equipment and machinery. Say goodbye to properties that no longer provide a business benefit. Deduct that loss in the current year.
Regardless of the cost-cutting measures you choose, make sure they mesh with your long-term business plan and overall tax approach. Call for additional money-saving tips and year-end tax strategies.