1. Office Space Rent
As a business owner, you might be considering investing in infrastructure. Going for an office space or warehouse on rent is a good option. Remember, this is a tax-deductible expense. Make sure to include this expense while creating your business plan.
When you own a commercial space, some of the types of expenses you are prone to are utility expenses like maintenance charges, internet, electricity, etc. These expenses are fully deductible.
3. Legal Expenses
Paying professional fees to financial planners, public accountants, etc., are some of the types of expenses you may incur.
4. Office Expenses
Office expenses are unavoidable types of expenses in business. Spending on office supplies, stationery products, cleaning supplies, or eatables for the employees is a routine expense that cannot be avoided. It should be a part of your expense category list.
One of the significant types of expenses for any company is employee salaries. Employee's compensation, bonuses, or salaries are unavoidable and tax-deductible expenses. It should be included in the company expenses list.
6. Advertising and Marketing
Any startup will invest in the growth of the company. One of the major areas for investment today is in the field of advertising and marketing the business. You can invest in marketing your business through social media by hiring digital marketing professionals and creating promotional material like banners, hoardings, etc. You can also invest in creating a PR campaign with the help of professionals.
7. Website and Software Expenses
In today's network society, it is almost impossible for any business to function without a website. Creating a website is one of the most important investments for any business. A website will contribute significantly to the success of your business by creating brand awareness, helping you gain customers, generate leads, increase sales, etc.
Furthermore, depending on the type of business you own, investing in software required for the success of your business is essential.
8. Vehicle Expenses
Another major type of expense to include in your business plan. Owning a car or a fleet of vehicles depending on the type of business you own, calls for careful consideration of investment. If you only require a car for your business, remember that it's an expensive item to hold, and it should be included in your initial business plan, as the expense is large.
9. Business Insurance
Business insurance is another type of expense incurred by companies to protect infrastructure, equipment, and property through insurance contracts. The company pays a premium on its insurance policies crafted to protect the property, employees, and other assets.
10. Employee Benefits
Any company can achieve its goals if its employees are working toward success, making employees one of the most critical assets. Every company can run a successful venture when it pays attention to its employees as much as customers. The employee retention rate could be improved by ensuring employee benefits like insurance, bonuses, appraisal, etc.
11. Home Office Cost
If you are in the earlier phases of your business and running your business from home, then home office cost is another type of business expense to consider. You may be allowed a little deduction on housing expenses like utilities and property taxes in your annual tax return.
Entertainment is another type of business expense a company bears to smoothen the relationship with clients, shareholders, and employees. Entertainment expense includes dinner meetings, company dinner with employees, tour, outings, and other entertaining events conducted for clients or employees. For example, if you invite your client for lunch, you will cover all the expenses, including the bill and tips.
13. Training and Insurance
Every company invests in the growth and development of its employees, and training expenses ensure just that. This type of expense is inclined towards spending on employee's training program, including fees, provision of material required for training, etc. If an activity is conducted for a few days, the company bears the cost of accommodation and food along with the fees and the other expenses involved.
Insurance is a type of expense companies use to retain their employees. Provision of group insurance, medical insurance, etc., helps the employee feel secure working with the company.
List of Monthly Expenses For Small Business
Small businesses require working capital and regular cash flow for their growth and development. Some of the type of expenses small businesses are ex are mentioned below:
1. Capital Expense
Any business, micro, macro, or large, cannot do without capital expenses. Business purchasing assets to increase the company's value through purchase or loan, represents a capital expense. These types of expenses are always recorded as assets on the balance sheet. It includes purchasing fixed assets such as machinery, buildings, etc. It also includes upgrading or purchasing intangible assets such as patents, copyrights, etc.
2. Business or Operating Expense
Operating expenses comprise the day-to-day transactions and functioning of a business. These types of expenses are referred to as OPEX. It is recorded on the company's income statement. Some of the major business or operating types of expenses include:
When you register your business, it is registered under an address. Regardless of the size and nature of your company, you will have to rent out or lease out a property to run your business operations.
The Human Resource (HR) expense depends on the business plan you have created and the type of business you own. A company with a single location would consolidate its human resources costs into a single budget. However, a company with many sites would decide to allocate HR-related line items for the remuneration, training, and hiring costs specific to each location.
A more accurate prediction of profitability at the end of the year may be made by allocating these costs to the areas that benefit from them.
These types of expenses in business include all direct and indirect costs, including storage, taxes, insurance, etc., that come with maintaining inventory. Business inventory can be used to lower gross receipts even when it is not tax deductible.
Brand recognition, goodwill, and Intellectual Property Rights (IPR) such as patents, copyrights, and trademarks are all intangible assets. As the term suggests, these assets cannot be seen or touched. However, these non-physical assets play an essential role in the company.
A company spends money on Corporate Social Responsibility (CSR) activities and similar activities to create goodwill and brand image. This is an example of an expense toward intangible assets.
Moreover, when a company spends on innovation and development, it contributes toward the scope of gaining patent or copyright. This is another example of expenses toward intangible assets.
Paying taxes is a legal requirement that impacts your company's overall establishment and reputation. The expense is a liability you owe to the government within a period of time. To calculate the tax payable, you will need to multiply the taxable income by the effective tax rate.
- Marketing and Advertising
Marketing and advertising your company's brand, product, and services through media channels will increase the company's recognition and reputation. This is a recurring cost for any business.
Constant marketing and advertising of the business requires regular cash flow and professionals working behind the scenes. This expense is known as marketing and advertising expense.
Having a business website is essential for the growth of your company. This requires that the website be regularly maintained and updated. You may incur costs on website design, maintenance, marketing, etc.
If your employee is traveling to meet a business need or demand, any expense incurred will be considered a business travel expense. All costs like accommodation, food, travel tickets, laundry, entertainment, etc., will be covered under this expense.
What are Deductible Expenses?
Tax-deductible are the types of business expenses, deemed ordinary, reasonable, or necessary. The expense should generate income. Always keeping records of all expenditures, whether for personal or professional use, is a crucial reminder.
You can then review your invoices or receipts and ask your accountant whether costs are tax deductible. You can use accounting software packages or applications to help track income and expenses to make the process more practical. Some of the tax-deductible expenses are mentioned below for your reference: