Are you planning on finally starting your entrepreneurial venture this year?
You'll soon find out that it costs a lot more than one would expect to run a business. You'll need to ensure you have enough money to make more money.
So what is the true cost of running a business? What are the business expenses you haven't thought of that you'll need to cover?
This guide will show you some of the most common business costs that you wouldn't expect and how to reduce them.
Here's how to cut business expenses:
Taxes
While we all expect to pay taxes for our business, you'll soon find out how burdensome taxes might be.
As you try to scale your business, the more tax you'll have to pay and the harder it becomes to avoid paying the tax. This slows down your company's growth and gives an advantage to your competitors already at the top of your industry.
You'll want to work with an accountant on how to legally reduce your taxes and find more tax-friendly jurisdictions for running your company.
If you haven't registered your business yet, you want to choose a jurisdiction that charges little to no income tax on profits. Make sure you also find a region that doesn't charge tax on your type of business.
For example, if you start a publishing company you might want to choose a region that doesn't charge tax for royalty payments.
Travel
Even in the early stages of your business, you'll be traveling a lot more than you expect. You'll have to pay transport costs to attend meetings with your clients.
As your business scales, you'll be traveling across the country and internationally. Plane tickets, business visas, etc., can bankrupt your business if you're not careful.
You may want to look into a service such as https://bentoforbusiness.com/fuel-cards/corporate-travel-management/ to help you plan your corporate travel expenses.
Staff
When you start your business you'll run as a one-person show and you'll want to hire employees to help you get started. While you should always pay your employees well, one of the biggest business expenses include the costs of hiring employees.
You might have to pay a rather high minimum wage that'll make it difficult to hire full-time workers. There are also payroll taxes, social security taxes, etc. that you'll have to pay.
As an alternative, consider hiring freelancer first. You can give them occasional work and pay them per project without much bureaucracy. After your business scales then you can hire them as an employee.
That's the Cost of Running a Business
Now you know the hidden cost of running a business and how you can reduce these costs.
The first hurdle are taxes as these can slow down your company's growth. Make sure you find ways to reduce your tax bill and you always operate out of a favorable jurisdiction.
You should also manage your travel expenses as these will rack up as you grow your company. Consider working with freelancers before hiring full-time employees.
You can find more articles on running a business on our website.
