How to Manage Business Costs
These simple efficiencies can help you to keep business costs low and profits high.
There are ways to reduce overheads and make efficiencies without reducing your growth rate. A few simple tweaks can make all the difference between hitting your investor targets and missing them by a couple of percentage points.
Our team of expert financial advisors and accountants are often asked what the best ways to make efficiencies and manage business costs are. We’ve put together this handy guide, to help you cut costs wherever possible, and if you’d like personalised advice, why not take advantage of our free 1-hour consultation and have a specialist wedo accountant offer the solutions that best suit your business.
Avoid Paying Tax Penalties of £900 or More
No one wants to domore financial admin, but proper bookkeeping can make the difference between being charged the right amount of tax, overpaying, or worse, underpaying and being charged a hefty penalty. Even submitting your self-assessment tax return late could cost you up to £900, and if you don’t provide the relevant supporting evidence, or submit incomplete or inaccurate records, you can end up facing a much larger fine.
We can do your bookkeeping for you, but just in case you decide to go it alone,HMRC has a handy guide to help. In general, you should keep these records for a minimum of five years, in order to submit your annual tax return successfully:
Cut Staffing Costs Wherever Possible
As nice as it is to employ full-time staff members who make your office environment a richer place, they could be making your business poorer if you’re employing them unnecessarily.
According to MIT, the actual cost of hiring a full-time employee is 1.25-1.4 times their base salary. This is due to additional expenses, like recruitment costs, your contribution to their pension pot, the cost of sickness and annual leave, plus pay adjustments, additional incentives and providing equipment and/or office space for their use.
When cutting costs is crucial, you can improve operational efficiencies by using part-time staff, freelancers or consultants instead. As well as costing you significantly less, this approach also carries the added benefit of lessening the need to provide and maintain a large office space, which can be a significant drain on resources.
Save up to £3,500 a Year by Becoming Incorporated
This may sound like a bold claim, but if your business is still making a profit after you’ve taken your salary, then incorporation as a limited company could be a very efficient way to make tax savings. That’s because the 12.5% corporation tax rate is considerably lower than the personal tax rate, which can be as much as 55% depending on your income and expenses.
The move to an incorporated company may require some financial administration, but it doesn’t have to be complicated. In fact, wedo accounting perform this function for many of our clients, and take care of all the paperwork associated with becoming and remaining a compliant limited company.
Reduce, Reuse, Recycle
It’s not just the environment you’re helping by being eco-conscious and making energy-efficient choices. By cutting back on your energy and office supplies use, you can save significantly on your business overheads. Here are a few simple ways to do that:
Cancel Poor-Performing Advertising Programmes
Part of working towards rapid growth, is knowing when to cut your losses. If you’ve been trying out a type of advertising and it just hasn’t provided the RoI you expected, do you really need to keep retrying it to decide whether it’s worth investing in? Many clients have reported significant cost savings by cutting out ineffectual advertising methods, and investing instead in highly cost-effective channels like word-of-mouth marketing, customer advocacy and social media advertising.
Boost Staff Productivity to Save an Average of £2,777 per Employee
According to HR Magazine, British employers are losing on average 27.5 days of productive time per employee per year, due to unhealthy lifestyle choices. If you consider the current average UK salary of £27,271, that’s a cost per employee to your business of £2,777.60p.
Encourage your staff to sleep more, cut out smoking and eat better, by offering them benefits like subsidised gym memberships, fruit on Fridays and an improved work/life balance with some time spent telecommuting. What you’ll spend on expenses you’ll more than make back on savings.
wedo accounting offers a free 1-hour consultation to prospective accountancy and business strategy clients. We can help you to come up with quick wins that cut costs and boost your sales growth, then provide a full business strategy that takes you to the next level, should you decide to work with us.
Book your free 1-hour initial consultation with a wedo accounting specialist, and start growing your business.