With around 45 percent of businesses closing their doors in their first five years of being in business, you want to make sure that you are not part of this statistic. This is why understanding the different types of business expenses you can expect is crucial. As a small business owner, it is your job to be aware of where your money will go.
Keep reading to learn the most common business expenses you will have to plan for.
With so much competition out there, you want to make sure that you put some money aside for advertising. The money you spend on advertising will help put you ahead of the competition and in front of more potential customers.
Advertising money includes marketing campaigns, billboards, promotional materials, websites, posters, brochures, etc.
Another business expense that you have to take into account is insurance. Depending on your niche you might also need to take out worker’s compensation insurance. Business vehicle insurance is another expense that you will have to factor in.
Unless you are going to be a one-man show, you will need to set money aside every month to pay your employees and any outsourcing that you decide to do such as CFO services. Do not forget to take into account commissions, bonuses, and any other type of compensation you offer to your employees.
If you make any payments to your children or your spouse through the company’s payroll, you have to add that into your expenses as well.
If your business needs a sticks and bricks office or warehouse then you must factor in rent to your expenses. With rent, you also need to think about the utilities, insurance, internet, and anything else your landlord says you are responsible for. Make sure you read your contract over before signing to be 100% sure of what utilities you are responsible for.
Sometimes there are certain subscriptions that you need in order to run a successful business. Subscriptions such as magazines, editing software, etc should all fall under this business expense.
Keep in mind that there are some industries that also require subscriptions to trade associations in order to stay current and relevant in their niche.
- Maintenance and Repairs
You never know when your business vehicle might break down. You need to have money allocated for emergency and unexpected repairs. If your company uses fleet vehicles that are part of daily operations, then you not only need to set money aside to ensure that your business is not completely disrupted, but you also need to have a backup plan or backup vehicles.
Now You Are Familiar With the Different Types of Business Expenses
We hope that now that you learned the most common types of business expenses, you are feeling better equipped when you are working on your business finances.
We have more where this came from – check out the rest of our business section for our latest helpful articles.