As a business owner, there is a long list of expenses your business will encounter. While ensuring that your COGS (cost of goods sold) are in check might be the most important aspect of watching your bottom line, it’s not the only crucial piece of expenses to keep an eye on. This is why we are breaking down the core costs in business that you should focus on and how not keeping up with these important business costs could hurt your business in the long run.
What Are Core Business Costs and Why You Need to Focus On Them
While each business will vary in what they offer and what expenses they will encounter, all businesses should focus on these core business costs. These are essential for maintaining a good business and ensuring that your business is in the best health possible.
Payroll Service Fee
Payroll is what you use to pay yourself and your employees, and payroll service is an essential tool to make sure that you are doing it correctly, trust me, you don’t want any surprise tax penalties! Payroll service fees should be at the top of your list when it comes to business costs because this is how your business can supply the workforce needed to make your business run.
Bookkeeping
Bookkeeping isn’t just about being ready for tax prep at the end of the year. It’s also about ensuring that every business transaction is carefully categorized and documented to assess your business’s finances. Without this crucial service you will have no idea whether you are making a profit, which is why you are even in business. Keeping it up to date allows you to make adjustments to your income and expenses as needed, which ensures your long-term success.
Merchant Services
Merchant services are companies that provide you with the tools to accept electronic forms of payments such as credit cards and debit cards. There are numerous options and rates available, knowing some basics about this and shopping around are key to ensuring you’re not paying too much for this highly competitive service.
Liability and Workers Comp Insurance
Simply put, this type of insurance is cover for an employer in case of an accident or a claim against the employer. Your business must have BOTH of these types of insurance because they cover different things. Workers’ comp mainly covers accidents that can’t be prevented in the workplace, while employer’s liability insurance covers a wider range of claims.
Why These Core Business Costs Are So Important
These core business costs are important to your business because your business will not function well without these core services. Without payroll service, you can’t pay your employees for their hard work. Without good bookkeeping, you will not be ready for tax prep and you will have no idea how your business is doing. Without merchant services you won’t be able to get paid or will be limited to cash customers only, and without liability and workers comp you won’t be protected in the event of an accident. Each one plays an important role in a thriving business, and while you might not necessarily get your money back on these investments, that doesn’t mean you shouldn’t keep a close eye on what you’re spending on them.
What Could Happen If You’re Not Utilizing Them
While these are considered necessary expenses of your business, not having the right type of insurance for your business or a bad bookkeeper can end up bleeding your company dry. It’s crucial that you’re not only watching the cost of these services but also the quality. This is even true if you are starting to grow your business and don’t have a lot of revenue coming in yet. You might think it’s best to put off utilizing some of these services until you are bringing in the big bucks, but getting a jump start on these core business services helps ensure your success.
What to Do to Ensure You’re Getting the Best Deal
You might not think that all of these prices are negotiable, but the reality is that these are not set costs. You can lower these costs by doing annual quotes from a variety of companies. Though you might not need to switch every year, it’s still a good idea to monitor the prices and quality of the service to make sure that you’re getting the best bang for your buck.
Running a business takes a lot of hard work to be successful. However, you don’t have to play a guessing game when it comes to what parts of your business are worth your money. Let us help by offering you a Periodic Core Cost Analysis to help you identify where you could be saving even more money on your core business costs! For more details, check out this post.