Are you hoping to join the ranks of the 30 million+ business owners that are making their own breaks in America right now? If you are then we tip our hats to you!
Owning a business is a great experience that enables you to exercise your creativity, challenge yourself in exciting ways and make however much money you want to make!
While there are certainly a lot of advantages to owning a business, it’s also important to understand the various entrepreneurial drawbacks that exist. Namely, paying business expenses.
Below, our team outlines a handful of monthly business expenses that you may or may not be prepared to pay for.
Our recommendation is that you get prepared to tackle these cash guzzlers so they don’t end up forcing you to shut your doors!
1. Loan Payments
Are you starting your business with your own savings? If you are then you don’t need to fret about this monthly businesses expenses pitfall.
If portions of your business are funded by credit though, we’re here to remind you that the money you’re borrowing isn’t free.
You’ll likely be paying steep interest on all of your loans which is something that you need to plan for when balancing your books come the 30th/31st of the month.
Keep these costs low by limiting the amount of money that you borrow and consolidating your debt with low-interest lenders.
There are a lot of things that can happen in business that you need to protect yourself against.
Employees getting hurt. Malfunctioning products. Vehicle coverage… Those examples barely scratch the surface.
Our advice is to talk to a business consultant to see which kinds of insurances people that operate in your industry generally carry. Once you’re informed, go out and get covered.
You don’t want to cut corners when it comes to buying insurance. If you do, you could end up going bankrupt when something goes array.
If you’re making money running your business, it should come as no surprise that Uncle Sam is going to want to get in on the fun. After all, he wouldn’t want you getting too rich!
Depending on which state you’re operating your company out of, you’ll likely need to pay federal taxes and state taxes on your business income. If you’re a corporation your tax situation is going to get a heck of a lot trickier too in comparison to if you were a sole-proprietor.
Talk to an accountant to ensure that you have a handle on what’s required of you on the tax front. The more you know, the less likely you’ll be to run into an audit.
4. Permits and Licenses
Depending on the kind of business you’re in, you may need to get certain permits or licenses from your city in order to operate. What’s worst is that these documents typically need to be renewed on an annual basis and tend to get more expensive as the years go on.
To avoid overpaying for documentation, know ahead of time what a certain city is going to ask of you permit-wise if you choose to do business in their borders. If you’re seeing that they’re asking too much, move your business to a more business-friendly city nearby.
You’re not going to have all of your employees working out of your garage, are you? Well… You certainly could. As a matter of fact, a lot of successful companies started out of garages (Apple for example).
If you’re like most people though, you’re going to want to keep your business out of your home and relegate it to a dedicated office space. That office space is going to cost money.
Shop around for a competitive office lease rate and always prioritize paying that lease down when it comes to your monthly business expenses.
If you fall behind on your office lease and your employees find themselves locked out of their job one day, you’re going to cause a panic that could evaporate your team and your company in an instant.
Most office buildings will combine utilities with your lease payment. Some don’t though and it’s very important that you’re not caught off guard if your office building has you on the hook for your utility usage.
If you’re paying your office’s electricity, water, etc. out of pocket, have professionals like those at Clements Electric or another local agency come out to advise on how you can make things more efficient.
You can bring any recommendations made to your building owner and demand that they enact them as a contingency for you to continue your lease going forward (replacing current bulbs with energy efficient ones is a common demand).
If nobody knows about your products, they aren’t going to buy them from you. This is where marketing comes in.
Running commercials, buying into a PPC campaign, creating YouTube videos. All of that costs money and that money needs to be available amongst your monthly business expenses. Otherwise, your brand is going to fade into obscurity.
Having trouble keeping up with your marketing expenses? Try out low cost/no cost marketing strategies like search engine optimization.
Wrapping Up Monthly Business Expenses That Entrepreneurs Will Need to Pay
Not being able to keep up with monthly business expenses is one of the primary reasons as to why companies shut their doors. By knowing what to expect, you’ll be able to better determine when you’re ready to launch your company.
We hope that our business expense run down has given you some helpful insight and we also hope that you’ll consider browsing more of the informative content on our website!