Have you ever been slammed with bill after bill in one month because you weren’t prepared? Most small business owners aren’t strangers to unexpected expenses. Typical small business expenses include inventory, supplies, and other ongoing costs of a business that go directly into your products or services. But, some business costs are hard to notice. You need to know the hidden costs of running a small business. Outsourced accounting services can help you manage unexpected expenses to ensure financial health.
What is an Unexpected Expense?
A truly unexpected expense is something that you can’t predict, such as a natural disaster or a medical emergency. These are the things that could happen to you at any time, but you can never be sure if they will – or how much they’ll cost you if they do. That means you can’t simply fit these expenses into your regular budget, it takes a different kind of planning to prepare for them.
We are here to help small business owners consider all business expenses- especially the less obvious ones. There are plenty of ways to plan for these expenses throughout the course of the year. The best way for a business to be prepared for unexpected expenses is to be in a solid financial state. Here are 10 examples of business expenses you might miss.
#1. Safety & Health
Many new business owners only look at their small business as a property opposed to its entirety. For your business to function effectively, your employees must be healthy. Small business owners must spend money on welfare and safety of your staff to ensure employees are working at their potential. Make sure that the actual building is conducive for work; free from damages and it has to follow the safety standards. Furthermore, you should also be responsible to spend some funds for their healthcare as well. Never overlook this as your employees will help you make your business grow.
As you build your small business, you need to protect it. Insurance shields you from financial and legal troubles. At the very least, you should get liability coverage. A liability insurance policy protects your business from losses if someone sues you.
Beyond minimum coverage, you can add different types of business insurance to safeguard your company. For example, you might want the property, commercial auto, or home-based business insurance. Talk to an insurance agent that specializes in small businesses to learn your options. Depending on your structure and industry, you might be required or encouraged to hold certain policies.
#3. Equipment Procurement and Maintenance
As a business owner, it is your responsibility to procure and maintain any equipment that is needed by your small business. If you have a call center business, for example, it is your job to get the computers and any other peripherals that are required by the job.
Although obtaining such equipment is a necessary first step, you also have to ensure that you save some money for its maintenance as well. Let’s face it, no matter what happens, there are always going to be something that needs repairs or replacing, right? So make sure that you have these unexpected business expenses covered by putting that in your budget as well.
#4. Professional Fees
When it comes to business, tools come in many forms, like professional services. The fact is, you are not a specialist in every aspect of running a business. Experts can help you succeed in less familiar areas.
If you are sued by a customer, you get legal help. Don’t understand your financial books? You need advice from an accountant. The list goes on of experts that can guide you through business ownership. Professional fees can get expensive, but they are crucial to your business.
#5. Credit card fees
Today, the cash-only business is fading. Accepting credit cards allows customers to make bigger purchases more frequently and conveniently. But, you must deal with the typical business costs of offering this payment option. You need a merchant account through your bank to accept credit cards. You must also lease or buy credit card processing equipment. And, each time you run a credit card transaction, the processing company charges a fee
Have an Emergency Fund
An emergency fund is usually several months of expenses in the bank for a business. There are many different benefits to having this money set aside for when unexpected expenses do occur. First of all, this can help to prevent a company from having to borrow money at a high rate of interest to make a quick payment on something.
In addition, this money can be used when business opportunities do come up. For example, in the most recent recession, many companies with large amounts of cash-bought out other companies for pennies on the dollar. If your company does not have a lot of money in the bank, it is important to have some sort of emergency fund for unexpected expenses as they occur.
Running a business means that there are going to be uncertain financial times. There are always seemingly random expenses that are popping up each month in business. It is important to be on a strong financial footing while in business. Having a large emergency fund can go a long way in dealing with unexpected expenses as they occur.
Limitless Investment & Capital Outsourced Accounting Services
No matter how well a business plans ahead, there are always going to be times when the business has an unexpected expense. Limitless Investment and Capital’s outsourced accounting services in Phoenix can help your small business create a budget to incorporate the unexpected expenses that occur month to month. Additionally, we understand and implement strategies that can help small business owners reduce business expenses. Talk to our financial professionals TODAY for advice on unexpected business costs.