6 Important Business Expenses You Need to Add to Your Budget

As a business owner, you know that there are a lot of expenses that go into keeping your business running smoothly. You need to think carefully about every penny you’ll be spending and every expense you’ll take. One of the most critical decisions is allocating your limited resources (time, money, and people) across all the areas of your business that need attention. But which ones should you be sure to include in your budget? Keep reading to find the 6 most essential business expenses you need to account for.

 

Rent or mortgage payments

 

This one is pretty obvious. After all, your business needs a place to operate from. Unless you own the building outright, you’ll need to factor in rental payments. Of course, mortgage payments will be a more significant expense if you’re buying a commercial property, but over time, the equity in the property can provide a cushion for your business in tough times. In either case, it’s essential to factor in these costs when creating your budget to make informed decisions about where to allocate your resources.

 

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Insurance

 

For any business, large or small, budgeting for insurance is a critical part of ensuring the ongoing health and viability of the enterprise. Businesses should consider several different types of insurance, each with its specific benefits. For example, property insurance protects against damage to business premises. In contrast, liability insurance covers claims arising from injuries or damage caused by the business.

 

Businesses should also consider taking out product liability insurance to cover any claims relating to products they sell. By budgeting for insurance and ensuring they have the right level of coverage, businesses can protect themselves against a wide range of potential risks.

 

Employee tools

 

The right tools can help employees be more productive, efficient, and accurate. They can also help to improve employee morale and reduce turnover. When selecting tools for employees, it is crucial to consider the specific needs of the job and the skills of the employees. For example, your HR team will need a recruitment management system to help them find and track candidates.

 

In contrast, your sales team will need a CRM system to help them manage customer data and pipeline. By investing in the right tools, businesses can save money in the long run by making their employees more effective.

 

Utilities

 

Any business that uses electricity, gas, water, or other utilities will need to factor in the cost of these services in its budget. Depending on your business type, you may also need to factor in telephone service and internet access. While the cost of utilities can vary widely, it’s important to ensure you have a clear understanding of your expenses to make an informed decision about your budget. With careful planning, you can ensure that your business has the necessary resources to run smoothly without breaking the bank.

 

Salary or wages

 

One of the most critical expenses is salary or wages. This is the amount you pay your employees for their work. It is essential to budget for salary or wages because it is an expense that is necessary to keep your business running. Without employees, your business would not be able to function. Salary or wages are an investment in your business, and they should be treated as such.

 

When budgeting for salary or wages, be sure to consider the following: the type of business you have, the number of employees you have, the skills and experience of your employees, the cost of living in your area, and the market rates for similar businesses.

 

Advertising and marketing

 

Businesses need to allocate funds for advertising and marketing in their budget. This is because advertising and marketing are integral to getting a business name and products/services, generating leads, and closing sales. The most effective way to advertise and market a business is to consider the target audience and what messaging will resonate with them.

 

There are many ways to advertise and market – from traditional print, radio, and television ads to digital marketing like SEO, PPC, email marketing, social media marketing, and content marketing. Businesses need to consider their budget and what type of advertising and marketing will be most effective for their target audience.

 

Final thoughts

 

These are just a few examples of essential expenses that every business needs to budget for; there are plenty of others (permits and licenses, professional services like accounting and legal help, etc.) that may apply depending on the particulars of your business venture. By taking the time upfront to map out all the potential costs associated with running your business, you can avoid being caught off guard when unexpected expenses inevitably come up.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(amazon author page) amazon.com/author/kenboyd

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/