In order to run your business, you will have to spend money to make money. If you do not keep these overhead costs in check, they can be major drains to your company’s bottom line. If your indirect costs are taking an increasingly larger amount from your revenue, you may need to reevaluate them and cut them where you can. Here are 12 ways you might be able to lower these costs so that you can improve your bottom line. 

1. Conduct a thorough review

If you have an accountant, ask for the most recent list of your business’s overhead costs. If you do not have an accountant, search using your company’s bookkeeping software to review the costs. Once you have the list, review everything and highlight items that:

• Are unnecessary
• Too costly
• Inefficient

This can help you to identify where you need to make changes.

2. Don’t expect immediate and substantial cost savings

It is unlikely that eliminating a single line-item expense will solve your issue, especially if you have completed cost-savings exercises in the past. Making several small changes may result in more savings than you might realize, however.

3. Brainstorming

Your employees may offer excellent advice about where you might realize savings. If your company is moderately sized or large, you may want to incentivize making cost-saving suggestions by rewarding the suggestions that realize the greatest savings.

4. Reevaluate contracts with third parties

Review all of the third-party contracts that you have for leasing equipment and retaining services. You may be able to identify some older contracts that no longer meet your needs. Your business may have outgrown an existing contract, leaving you spending more to fill in the gaps in services yourself. This may lead to an increased contract price but a more substantial decrease in costs in your ledger’s other columns.

5. Clean your storage room

If you have outdated and non-working technology cluttering your storage room, clean it out and sell the equipment. You can also donate them to a school or a charity if they are still working. Make certain to ask for a receipt so that you can write off your donations on your taxes.

6. Look at your staff

You should also assess your staff and let go those who have been consistently underperforming. Underachieving employees drain your resources and the morale of your other employees, leading to less overall productivity. Make certain that your hiring and firing decisions are done in a legal manner so that you will not be sued.

7. Leverage your current base of clients to save on promotion costs

One of the best types of referral comes from your current clients. Enlist your happy customers to be the ambassadors of your brand while reducing your marketing and advertising budget. You can ask for testimonials and offer incentives for referrals.

8. Go paperless

By greatly reducing the paper that you use, you can save on storage space, paper, toner and ink and printers. Back up your important documents to a drive or the cloud and shred unnecessary files. When you have completed the transition from paper to electronic storage, sell your filing cabinets.

9. Use the right business credit cards

Most business owners have at least one credit card that they use for business expenses. Make certain that your card offers you the most benefits. If your employees use business credit cards, consider choosing business cards that allow you to control spending to certain categories and amounts on each card to save money.

10. Control purchasing

If you can, designate a person to be responsible for handling all of the purchasing. This person should be someone who is skilled at negotiating and who is able to ask for discounts. When this person has purchasing as his or her job, he or she should also look out for the best bargains.

11. Sublease space in your office

If you own your business’s space, you may have a group of rooms or floors that are unused. Sublease out this space to other businesses and subsidize your payments with the rents that you receive.

12. Determine how much space your business needs

Some businesses may find that they do not need their office space and are able to move to a telecommuting model. Others may find that relocating their offices to new locations may offer cost savings. Think about what your office is used for and why you have it. If you do need an office, think about downsizing or office rental agreements that let you have a professional space for a minimal cost.

Cutting overhead costs is an ongoing process offering results over time. It requires a careful evaluation to determine the greatest efficiencies. Keeping your overhead costs down should involve a structured method of review. Contact Tom DiTullio Accounting today for advice about how your business might improve its bottom line through cost savings.

While some people use the terms accounting and bookkeeping interchangeably, there is a difference between these functions in your business. People confuse these important business functions because of the similarities between bookkeeping and accounting. It is important for businesses to have strong bookkeeping and accounting functions in order to have better financial management. By understanding how bookkeeping and accounting differ from each other, you will be better able to avoid financial problems.

Bookkeeping vs Accounting

Bookkeeping involves keeping the books of a business. Bookkeepers record all of the financial transactions and financial documents of the business. Commonly, bookkeepers use software programs to assist them with recording the businesses’ financial affairs. They may also summarize and classify financial data. The importance of bookkeeping is that it helps to keep the records that businesses need. A bookkeeper’s job may include the following:

• Recording debits, payments and credits
• Reconciling all of the accounts
• Receiving and sending invoices
• Payroll tasks
• Mantaining historical accounts and ledgers
• Preparing internal reports

Accounting involves collecting, classifying and manipulating financial information for individuals and organizations. While accountants may perform some bookkeeping tasks, their jobs involve much more detailed work in analysis, reporting and advising. A business’s financial data will be analyzed, classified and interpreted for the benefit of the business. The importance of accounting to a business is getting insight into the business’s finances, making financial projections and making certain that the business complies with tax laws. An accountant may do the following:

• Preparing statements
• Completing the business’s tax returns
• Analyzing operational costs
• Giving business owners information so that they can understand the
• business’s finances and make financial decisions
• Establishing accounting functions
• Customizing reports and statements
• Creating budgets
• Making financial and cash projections
• Managing end-of-the-year finances

Bookkeepers record financial data, which is one component of accounting. Bookkeepers follow the orders that are given by accountants. Because these roles overlap, it is sometimes difficult for people to understand how the difference between bookkeeping and accounting. Many accountants complete bookkeeping tasks, and many bookkeepers go on to become accountants. The team at Thomas M. DiTullio Accounting offers a full suite of bookkeeping and accounting services.

To learn more about how we can help your business with its financial needs, call us today to schedule your consultation.

As a small business owner, you likely spend too much time during each week taking care of the accounting side of your business. You might feel as if your business is too small to consider hiring an accountant. What many business owners fail to realize is that when you try to complete your small business accounting processes by yourself, it can take away from your ability to conduct the other important tasks of the company while also being highly frustrated. You might be wondering, “How do I find a small business accountant near me?” Tom DiTullio Accounting is available to help you with all of your business accounting needs.

Spend your time on the important tasks

When you choose to outsource your business accounting tasks to an accountant for small business services, you can free up your time to such things as working towards securing clients, customers, new business and your goals rather than on daily administrative and bookkeeping tasks.

In order to find an accountant who can meet your needs, you will want to find a firm that is able to offer a range of services from which you can choose. This may help you to have only the services that your particular business requires while also allowing you to get back to doing what you do best.

Access to expert help and advice

The duties and responsibilities of an accountant are myriad. Your ideal accounting services should comply with IRS standards. Attending to these tasks may be difficult when you also need to pay attention to growing your business. If you try to do them yourself, you may make mistakes. An experienced accountant from Tom DiTullio accounting can offer strategic insight and advice about the particular ins and outs of your business.

Putting a focus on your business’s growth

Outsourcing your accounting can also help you to focus on the areas in which your business may grow by looking at your patterns of cash flow. You can then optimize your pricing and inventory to enhance your bottom line. This may help you to understand how to grow your business rather than getting lost in the minutiae of daily administrative tasks.

Tax considerations

Tax laws change frequently, and staying on top of the changes can be difficult for most small business owners. With our help, you can feel more confident that your taxes will be calculated and submitted properly while also understanding the various deductions you may be eligible to take. This can help you to avoid potential penalties while also helping you to reduce your business’s tax bill.

Audit representation and readiness

When you have a good accounting team on your side, you can make certain that your business is prepared in the event that it is audited. We can help you to prepare for an audit and navigate your way through it. We can also help by making certain that you understand and implement the best practices for document and receipt retention so that you will not be caught unaware.

Tom DiTullio Accounting understands how important accounting services are for the success of your business. Call us today to schedule your consultation so that you can learn more about how we can help you succeed.

Some small business owners make the mistake of failing to think about their taxes until the time for filing is drawing close. Instead, tax planning should be a continuing process. At Thomas M. Ditullio Accounting, our team of professionals understands the importance of tax planning, and we work closely with our clients to help them to save money when they file.

What is tax planning for small businesses?

When you engage in tax planning, it involves the process of considering your different options in order to inform you about how you should conduct your transactions in such a way that you might be able to reduce or eliminate your tax liability. Reviewing your expenses and income each month and meeting with your tax professional at Thomas M. Ditullio Accounting at least quarterly might help you to analyze how to take advantage of the deductions, credits and tax provisions that are available to you. It is important for you to understand that using the provisions fraudulently in order to reduce your business’s tax liabilities is considered to be illegal tax evasion. Tax planning is instead a legal way to help you to reduce the tax burden that your business might otherwise face.

Factors that the IRS may consider when it is determining fraud

There are four primary areas that the IRS tends to focus on in order to determine whether or not a business has committed fraud, these include:

• Failing to report substantial income, dividends or a portion of receipts
• Claiming improper or fictitious deductions
• Accounting irregularities such as not keeping good records
• Improperly allocating income to related taxpayers in lower brackets

It is very important that you avoid these improper tax strategies.

Strategies for small business tax planning

There are numerous tax strategies that you may have available to you. Your tax planning strategy should be based on its structure in order to accomplish some of the following goals:

• Getting a lower tax rate
• Reducing your taxable income
• Claiming the available credits and deductions
• Controlling when taxes have to be paid
• Minimizing the effect of the alternative minimum tax
• Avoiding tax errors

It can be very difficult to come up with exact estimates, but you are likely already projecting your revenues, cash flow and income for your general planning purposes. The more accurate that your estimates are, the likelier that your tax planning efforts will be successful.

Business entertainment expenses

One legitimate type of deduction that may be available to your business is a deduction for business entertainment expenses. As long as you follow the specific guidelines, these expenses may help you to lower your tax bill. To qualify, the expense must have been incurred either after, during or before a business discussion. The location must be one that is reasonably conducive for business. For example, while a quiet restaurant may pass muster, it is unlikely that a dance club will. Locations that are generally considered to be too distracting include sporting events, hunting trips, skiing trips and theaters. You may take up to 50 percent of your entertainment expenses as a deduction, but you must have good records to support them. The purpose of the meeting must have been arranged for business purposes.

Automobile deductions for businesses

Certain deductions for maintenance and operating costs for your vehicle may be deductible as business expenses if you use it to conduct business. You may be able to deduct the mileage expenses that are allowed by the IRS. The amounts change from year to year, so you will want to talk about the amounts with your tax professional at Tom Ditullio Accounting.

You might be able to maximize your available vehicle deductions if you own two vehicles by including both in your deductions. Your business miles that are driven are determined by your business use. To figure that out, you divide the business miles that were driven by the total miles for each vehicle. This can result in substantial deductions. It is very important that you keep good records, including mileage logs and receipts.

Time spent working at home

Understanding the home office deduction is important, but it is also complicated. If you have a home office, you will need to understand how to conduct business at home in a manner that will allow you to take the deduction. In order to deduct home office space, it must be located in a room that is not used for other purposes. You should also make its purpose stand out by displaying your business phone number and business address on business cards, having your business visitors sign a guest book when they visit and keeping a time and work activity log. You should also keep copies of all of your paid invoice and your receipts. This helps by making it significantly easier to figure out the percentages that should be allocated to your business use of your home.

Under Section 179 of the tax code, you can take immediate deductions for qualified business property that you purchase up to a certain limit. The equipment may be used or new, and it includes some software expenses. Even if you do not qualify for the home office deduction, there may be some deductions that you can still take. Meeting with your tax professional can help you to figure out what deductions might be available to you. To learn more about tax planning, contact Thomas M. Ditullio Accounting today by calling us at 856.228.2205.