Running a small business comes with its own set of challenges. One of those challenges is managing expenses. Managing expenses is crucial to ensuring long-term success in your business. While some costs are evident, others might slip under the radar. In this post, I’ll uncover five common, but often overlooked expenses that small businesses should consider for effective bookkeeping.
Technology and Software Maintenance
In today’s digital age, technology is a backbone for businesses. The costs associated with maintaining software licenses, updates, and cybersecurity measures can add up! Investing in reliable technology is crucial! Technology and software creates efficiency throughout your small business that you can’t afford NOT to have!
Deductibility: Small business technology and software is 100% deductible.
Training and Professional Development
Employee training and development is vital for business growth. Often, the costs associated with workshops, courses, and certifications are overlooked. Investing in your team’s skills not only improves productivity, but also contributes to the overall success of your business.
When drafting your small business budget, make sure to include a professional development expense for trainings and certificates that could be assets to your business!
Deductibility: Small business training expenses and employee development costs are 100% deductible.
Regulatory Compliance Cost
Staying compliant with regulations is a non-negotiable for small businesses (if you want to stay in business)! The costs of compliance can include legal fees, annual fees, miscellaneous fees, and possible fines. Compliance can include state or federal regulations that must be honored by your business. These fees are often underestimated and are all deductible for your small business.
Ensuring your bookkeeping budget includes provisions for unforeseen compliance expenses is a must!
Deductibility: Legal fees for businesses and compliance fees are deductible 100%.
Marketing and Advertising Expenditures
While many small businesses understand the need for marketing, the full scope of expenses may be underestimated. Marketing and advertising costs can consist of online advertising, content creation—both deliverables or services provided, and promotional materials—both digital or physical. Marketing can impact your budget significantly. In fact, for most small businesses, marketing is 3% of their gross revenue annually.
It’s essential to have a clear picture of your marketing spend for accurate bookkeeping and budgeting for future years or upcoming launches!
Deductibility: Small business marketing and advertising expenses are 100% deductible.
Employee Turnover Costs
Small businesses regularly exclude employee turnover expenses from their bookkeeping, leaving money on the table! High turnover rates can incur substantial hidden expenses. Recruiting, onboarding, and training new employees require time and resources, as well as subscription fees and platform expenses. Consider these costs when budgeting and strive to create a work environment that fosters employee retention to minimize turnover, thus reducing expenses.
Indeed, for example has several fees when posting a job.
Deductibility: Employee turnover/retention costs are 100% deductible.
Effective bookkeeping is not just about recording the obvious expenses; it’s about anticipating and accounting for all potential costs. By acknowledging and budgeting for these often overlooked expenses, small businesses can ensure financial stability and long-term success!
Want my list of deductible business expenses to ensure you are not leaving anything out of your books? Click here to snag it!