Running a business involves managing various expenses to keep operations smooth and profitable. While business owners are often vigilant in tracking major expenses, some costs tend to slip through the cracks, leading to financial discrepancies and potential compliance issues.
Here are some reasons it’s important to account for forgotten expenses:
- Financial Accuracy. Accounting for all operational costs ensures accurate financial records, which are crucial for making informed business decisions and financial planning.
- Tax Compliance. Maintaining comprehensive financial records helps accurately report income and expenses during tax filings, reducing the risk of tax-related penalties.
- Expense Optimisation. Tracking overlooked expenses allows business owners to identify areas for expense optimisation and cost-cutting, ultimately improving the bottom line.
- Transparent Business Operations. A full account of all expenses provides transparency in business operations, which can be beneficial when dealing with investors, stakeholders, or regulatory authorities.
- Strategic Planning. By accounting for all expenses, business owners can develop more effective long-term strategies, budget allocation, and resource planning.
The following are some commonly forgotten or overlooked business expenses.
Small, Regular Expenses
Business owners often neglect to track small, day-to-day expenses, assuming they are insignificant. These may include office supplies, travel expenses, utility bills, and minor maintenance costs. These expenses can increase over time, affecting the business’s financial health.
Bank fees and associated charges, such as transaction fees, account maintenance fees, and overdraft fees, can go unnoticed amidst other financial transactions. Failing to monitor these costs can result in unexpected financial losses.
Subscriptions and Memberships
Recurring subscriptions and memberships for software, professional associations, and industry platforms are easy to forget. If your business’ back-end functions involve using software-as-a-service (SaaS), their vendors may have a nominal fee to use the premium parts of the program.
Regularly review these expenses to determine their continued relevance and value to the business.
Mileage and Vehicle Expenses
Tracking mileage and vehicle-related expenses is crucial for businesses with extensive travel or company vehicles.
For example, the costs are evident in important service-related businesses like trucking firms, where you must deal with vehicle maintenance, parts, fuel costs, and the main garage and its service components. Overlooking these costs can result in missed deductions and inaccurate expense reporting.
Employee Benefits and Perks
Employee benefits and perks, such as health insurance, retirement plans, and fringe benefits, can be complex to account for. Business owners should ensure that all relevant expenses related to employee benefits are accurately recorded.
Telecommunication costs, including phone bills, internet charges, and communication software subscriptions, are often overlooked, especially in the current business climate where most transactions are digital and conducted over high-speed broadband grids like nbn® Enterprise Ethernet.
Marketing and Advertising Costs
Marketing and advertising expenses can be dynamic and may not always follow a set budget. Tracking promotional costs across various channels is essential to evaluate their effectiveness.
Legal and Compliance Fees
Legal fees, permits, licences, and compliance-related expenses can be overlooked during busy periods. These costs should be diligently recorded to ensure full compliance with regulations.
Depreciation of Assets
Business owners often forget to account for the depreciation of assets, such as machinery and equipment. Proper recording of depreciation is critical for tax purposes and maintaining accurate financial statements.
Employee Training and Development
Investing in employee training and development is vital for business growth. However, these expenses can be overlooked if not adequately documented and included in the budget.
Consider this scenario: Imagine one of your employees is invited to participate in a business seminar or training session directly related to their job responsibilities. The question is whether they cover the expenses themselves or whether the company is willing to allocate a budget for this purpose, provided they provide a detailed account of all receipts.
Credit Card Interest and Charges
Credit card interest and charges can accumulate if not closely monitored. Business owners should regularly review credit card statements to track these expenses accurately.
Repair and Maintenance Costs
Routine repair and maintenance expenses for office spaces, equipment, and facilities can be easily forgotten. However, they should be accounted for to ensure that assets function efficiently and safely over their intended lifespan.
Reduce Business Expenses and Increase Profits
A key to financial success lies in being attentive to the details and leaving no expense unaccounted for. By proactively addressing these overlooked expenses, business owners can ensure financial accuracy, make better business decisions, and maintain a healthy and sustainable operation.
Being a Bartercard member can help reduce business expenses and increase profits using Trade Dollars. The cash saved can be allocated to other essential spending and investments.
DISCLAIMER: This article is for informational purposes only and does not constitute financial advice.