WHETHER you’re new to being self-employed or you’ve been working for yourself for a while, having a clear expenses plan is essential. As well as helping with business growth, effective expense management is crucial for maintaining financial stability.
By being organised early on, you’ll be able to plan and stick to budgets and meet the financial forecasts set out in your business plan.
To help you organise your accounts, here is a guide that’s designed to keep expenses in check and pave the way for long-term success.
Business premises
For many self-employed people, working from home is a cost-effective and practical solution. It’s something we’ve become used to in recent years, too, thanks to the rise of hybrid working.
But if you’re basing your business from home, there’s a lot to consider that employers would usually cover. For instance, you’ll discover that basing your enterprise from home reduces overhead costs associated with renting external premises and it may also qualify you for tax deductions related to home office expenses.
You’ll need to check ahead, however. HMRC rules over what you can claim expenses for are complex and are different for limited companies and sole traders.
You’ll also need to evaluate your space needs and explore the possibility of converting a part of your home into an efficient and comfortable workspace. This not only saves money but also enhances work-life balance.
Stock and equipment
Carefully managing inventory and equipment expenses is crucial. Regularly assess your stock levels to avoid overstocking or understocking, as both situations can impact your cash flow.
When buying equipment, consider the option of buying used or refurbished items, especially for tools or machinery that may not require the latest technology. This approach can significantly reduce upfront costs.
Transport and vehicles
If your business involves regular travel or deliveries, weigh the cost-effectiveness of different transportation options. Consider the potential benefits of using public transportation or carpooling for business-related activities. If a dedicated vehicle is necessary, explore the option of buying a used vehicle, ideally something reliable like a VW. This can be a more cost-effective solution compared to purchasing a brand-new vehicle, helping you allocate resources wisely.
Technology to track expenses
Use technology to streamline expense tracking and budget management. There are different accounting software types and mobile apps specifically designed for small businesses to record and categorise expenses efficiently.
This not only saves time but also provides a clearer picture of your financial health. Regularly reconcile your accounts, review financial reports, and set realistic budgets to stay on top of your business expenses. This proactive approach to financial management can ensure that you’re keeping om top of your income and outgoings.
