Running a successful online business can be an expensive ordeal. Fortunately, there are numerous ways to save money in such endeavors, including tax deductions, economical shipping/packing, and commonsense tactics.
When it comes to tax payments, owners of online businesses have plenty of avenues for cutting their costs and beefing up their bottom lines. Here’s a quick summary of areas where you can reduces expenses and make wise financial moves:
Deduction Auto Mileage and Expenses
When you fill out your tax return make certain to take advantage of itemization on the Schedule C. Even when you can’t or don’t want to itemize on the main return, it is still possible to itemize on your business return.
Claiming Your Home Office Deduction
Business owners who run home-based shops can usually claim a decent-sized tax deduction for home office space. This is one of the most overlooked business tax deductions, according to the IRS.
Keeping Track Of Spending
Use an expense-tracking app to stay up to date on every dollar that goes out. It’s far too easy for online business owners to incur routine expenses and let spending get out of hand. Just by tracking, you’d be surprised how much you’ll save by slightly changing your behavior.
Using good software
For less than $50 anyone can purchase and learn to use simple tax software programs that reduce the chance of making a filing error to less than 1 percent. Not using tax software leads to all sorts of potential mistakes. The IRS notes that small business owners who don’t file electronically, with software, have an error rate of greater than 20 percent. That can be costly for any business owner who has to re-file an amended return. Tax professionals don’t come cheap.
Minimizing the Cost of Packaging
Shipping and quality packaging costs can cut into any business’s bottom line. Those who own online companies should pay special attention to the cost of packaging supplies because this expense category is often one of the largest for those who sell online. What are the main areas of potential savings when it comes to shipping and packaging?
- Working with your carrier to negotiate bulk discounts
Most major carriers are happy to give recurring discounts to long-term customers, This is where online business owners can negotiate postage savings of up to 40 percent depending on the carrier and how often you ship.
- Buying packaging materials in bulk
Purchasing packing supplies in large quantities is the simplest way to score some major savings. This technique works even in the so-called big-box stores. Seasonal discounts for purchasing 10, 20 or more items at a times typically nets 10 percent discounts.
- Recycling packaging materials
Of course, there are many other ways for owners of online companies to save money and work more efficiently, including better customer engagement on your website and safe data encryption. However, reducing everyday expenses like tax payments and packaging costs can go a long way toward boosting profits and setting some smart habits for running a small business.