In your small business in the UK, there are bound to be costs. There will be things you need to buy, such as equipment, stocks of products, shipping, software, cloud services, etc. And of course, there’s the costs of transportation whenever you’re meeting with clients or joint venture partners in person. These expenses may even eat into your profits.
One thing all businesses want to do is minimise expenses to maximise profit.
Business people often call this cost-cutting. Big businesses often resort to downsizing their teams; but if your team only comprises a few people, all of whom are essential to running the business, this is not an option. You’ll have to figure out other means of cost-cutting. In that case, what other expenses can you do without?
If you’re an online retail store, for example, switching to a cheaper courier service may help. Or, instead of renting a storage room, you could use the empty space in your workshop behind your house. Aside from these, there are many other ways to reduce your costs.
But of course, you have to know the numbers.
And to know the numbers, you need records of all your business expenses. Documentation, such as receipts and invoices, are essential. Keep them in a safe place all the time, so you can go back to them later on. Also, it’s wise to keep an Excel sheet listing all of those business expenses, and when they were made.
If you have that data in a spreadsheet, you can then sort them from largest to smallest. You’ll then have an overview of your biggest expenses. With that, you can then decide if those expenses are necessary, or if you can still do business without them. If the big expenses are crucial, then move on to the smaller ones and see which one of those you can do without. Even the smallest expenses can add up to large sums if you’re not careful.
It’s also a great idea to log those expenses as you make them, so that you don’t forget. The more those transactions pile up, the more likely you are to not remember every single detail. Setting aside a few minutes each day to update that expenses spreadsheet is good practise.
Another reason is for getting tax breaks
If you have all your business expenses accounted for, you can then get exemptions for those expenses when tax time comes. Of course, you don’t want the government to tax you for the money you spent running your business. It’s only fair.
In summary, keep those receipts, update that expense spreadsheet daily, and then decide which of those expenses you can do without.
This way, you can keep your costs down and your profits up, without sacrificing the quality of the products and services you give to your clients.
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