One of the most important ways to get your finances in order is to categorise your business expenses. Not only does this allow startups to track their spending more efficiently, but it also prepares you for tax season and helps you make better financing decisions in the long run.
If your expenses aren’t properly organised, this could result in a significant outflow of funds that could have been used to grow your business.
Business expense management should be a priority for every business, regardless of industry. That’s why we’ve put together some of the most common business expense categories to get you started.
Besides taxes and business insurance, here are the most common business expense categories at a glance:
When you invest in advertising and marketing efforts, it helps to boost your sales, secure more clients, and increase brand awareness. When done right, strategic marketing leads to growth for your business.
Most marketing expenses today would include digital advertising, printed materials and displays, social media and search advertising, media monitoring, and the list goes on.
Although work from home setups continue to be the default arrangement in Singapore, many businesses still have physical offices and spaces to maintain and pay for. Apart from monthly rental fees, utility payments that are used to keep the physical space running would fall under this category. This covers utilities such as water, electricity, air conditioning and internet access.
Since rent can be a massive expense, consider downsizing your space, exercise your right to sublease or assign, or revert to remote setups for you and your team members.
Established companies may find this expense to be optional, given that they may have in-house teams for specific functions. But if you’re just getting started as a small business, you may have to engage professional services for certain aspects of your business.
Instead of doing it by yourself, bringing in an expert can help you get the resources you need more quickly. From accounting services to graphic design, most freelancers and contractual professionals are highly skilled in their targeted discipline, which can benefit your business greatly. Think about which professional services you want to keep in-house and external.
Whether they are independent contractors or full-time employees, payroll and compensation would likely be your biggest business expense. This includes wages, bonuses and commission. Since payroll taxes are a completely different expense, it would be useful to create a separate category for it to avoid confusion.
If you want to start utilising automation for all your payroll needs, here are some of the best payroll software for small businesses in Singapore.
Today, many startups rely on software to organise their tasks and workflows more efficiently. This includes everything from billing and invoice management, accounting, communication, SaaS management, website building, and payment transaction software.
Business software increases effectiveness and efficiency but also reduces the workload on manual data entry — giving you more time to grow your business.
Continuous employee training can reap long-term benefits for both your company and employees. Apart from operational efficiency, skills training increases employee value as well. When your employees feel valued and see that there are development opportunities in place, they are more motivated to perform well in the workplace.
Some ways to implement effective training programs could be through knowledge tools, webinars and skills training, and workshops organised by either internal or external parties.
Since most companies are operating remotely, you’d think that maintenance and repair costs are no longer relevant. News flash: that’s completely false. Maintenance costs are not exclusively for physical spaces only. Server and software maintenance is a thing and can be one of the biggest expenses as a business, next to payroll and compensation.
This comprises fees for SaaS management, web hosting and maintenance, domain name costs, as well as accounting software.
Don’t make the mistake of confusing employee wages with exclusive benefits. Those that count as employee benefits include everything from the bigger expenses like paid vacation leaves and health insurance to the smaller ones such as swag bags and company merch. No matter how small the amount is, ensure that every expense is accounted for.
Fortunately, most employee benefits and compensation are tax-deductible, so you don’t have to worry about paying out of pocket.
It may seem like a daunting task at first but organising your business expenses doesn’t have to be complicated. In fact, it’s relatively simple with these options:
Made with the modern entrepreneur in mind, the Aspire Business Account comes with an expense management feature that allows founders to organise their finances in a unified platform. Define spending limits, track budgets, and approve company spend — all in one place.