As a small business owner, one of the smartest ways to maximize earnings is to minimize business expenses.
Fortunately, you don’t need a business degree to get a firm grasp on the basics. Whether you own your own company or run a side hustle in your free time, learn how to cut business expenses so you can keep more of your earnings.
Get on a business budget
What are your start-up costs? What annual and monthly recurring business expenses do you have? The more you know about where your money should go, the more you’ll save on unnecessary expenses you might regret later.
Make it easy on yourself with a budgeting app — after all, they’re not just for personal budgets. Mint, for example, helps you keep track of one-time fees, fixed ongoing fees, variable ongoing fees, and optional expenses.
If you have money saved to invest in your side hustle, great. But if you’re thinking about taking on debt to cover business expenses, reconsider.
That’s not to say it’s never a smart idea, but first, try and find another way that could result in increased revenue without the burden of new debt and associated interest fees.
Keep the same approach in mind when charging to a credit card. It’s a nice convenience for business expenses, but aim to pay off the balance every single month. Balance already too big to pay off all at once? Get tips on making a pay-off plan.
Almost everything you need for your business costs money, so take advantage of any opportunity you can find to trade for what you need instead. Swap your writing chops for someone else’s graphic design, or trade your social media expertise for someone else’s tech support.
Barter with someone you know or get involved with a formal exchange program, such as BizX. Just keep in mind that although you’re not receiving cash for the work you’re providing, you’re still expected to pay income tax on its value.
The smaller your side hustle, the more inclined you probably are to do everything yourself.
But time is money, so do the math and see if it might actually be cheaper to outsource some of your work. Continue to do the things you’re really good at and represent the core of your business, but outsource tasks you don’t enjoy or aren’t great at.
Ask about corporate rates
You don’t have to be a big corporation to get a corporate rate.
For example, if you’re traveling for work, call the hotel and ask if they offer discounts to business travelers. (Just be sure to call the local hotel number and not the 800 number, as you’ll probably have a better chance of getting a deal.)
If you travel there often, let them know you’d love to stay at their hotel every time if you can get the discounted rate. (Choosing hotels with lower occupancy rates helps.)
Take small business tax deductions
Save as much as possible with these small business tax deductions. Be sure to consult with a tax expert, who can offer advice for your specific situation.
When you work for an employer, you pay half of your Social Security tax and your employer pays the other half. When you work for yourself, you’re responsible for paying the whole thing.
Fortunately, half of your self-employment tax is tax deductible. Use Schedule SE (Form 1040) to figure your deduction.
Business use of your home
If you are using any part of your home exclusively for your business, you get a tax deduction for it.
Maybe your home office is an entire room or just part of one. Either way, measure the square footage of what you’re using (exclusively for business) and divide that by the total square footage of your home. Use Form 8829 to figure your deduction (for a portion of rent or mortgage and utilities).
Second phone line used for business only
Don’t get a second line if you don’t really need one, but if it makes sense for your business you can deduct the expense.
Office supplies, equipment, and software
Save your receipts for these deductible business expenses, to be recorded in Schedule C (Form 1040).
Other business-related expenses
All sorts of other expenses required for your business are tax-deductible, so keep track of things like travel (airfare, Ubers, mileage), advertising, legal expenses, repairs and maintenance, taxes, and licenses.
You’ll be asked for all of these (and more) when filling out a Schedule C.
Health insurance premiums
If you don’t have health insurance through an employer and you don’t qualify through a spouse, then you can deduct the expense of paying for your own health insurance.
Any money you contribute to an individual 401(k) or IRA is tax deductible.
Know when you need an attorney
When it comes to legal matters, you may feel most comfortable having a lawyer take care of it for you. But why pay an expensive attorney to do something you can do for yourself?
The US Small Business Administration (SBA) lists five legal matters you can probably take care of on your own:
- Naming your business and claiming a trademark
- Setting up the legal structure for your business
- Filing and registering paperwork to start a business (e.g., licenses, permits)
- Creating contracts and non-disclosure agreements
- Creating buy-sell agreements
However, there are four scenarios in which the SBA says you need an attorney’s help — when you want to form a corporation, file a patent, deal with litigation, or buy or sell a business.
Go with your gut
Though a small business should take every opportunity to save money, it should never be at the expense of the quality of your work or integrity of your company.
If the cheaper option doesn’t feel right, don’t do it. At a minimum, sticking to a budget, taking your tax deductions, and staying out of debt will save your side hustle a ton.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|