by Donna Toothaker
As entrepreneurs/business owners, we take great care in setting competitive rates, creating packages and tracking the hours we and our teams put in; but are our rates really paying for our expenses? Take a good look at where you spend your money. Are you covering all your bases? Are you taking more into account than simply the items or services you use on a daily basis? Any money you spend to run or grow your business must be paid for somehow, and not necessarily out of your own salary. Consider the expenses you incur in these areas:
Rent/Mortgage: If you rent or lease an office space, be sure you can easily cover that, and any additional fees that are involved (maintenance, snow removal, etc.) Most VAs work from home offices. Consider “leasing” your home office to yourself as your business grows to subsidize your mortgage, and simplify your taxes.
Utilities: If you are renting, any utilities passed on to you by your landlord need to be covered. If you work at home, you should assign a portion of your utilities costs to your business – especially electricity and internet service. Also include your mobile phone plan (or a portion of it) if you use that for your business.
Insurance: If you carry any sort of business insurance, or if you have extra homeowners or renters insurance to cover equipment losses, count it as an expense. You may also consider health insurance as an expense, especially if you had to buy your own after leaving your job to work for yourself. It is a necessity (and required in states like Massachusetts). In essence, it is a benefit you are providing for yourself.
Office supplies, equipment, and software: Office supplies, such as envelopes, postage, pens, paper, computers and printers are obvious expenses of doing business. Software applications and online products are also an expense, including Anti-virus software, project management, online backup, and online greeting card services, to name a few.
Web Hosting, Web Maintenance: Count in any and all web-related business expenses, including hosting, design and maintenance (or the hours you or a member of your team spends designing and maintaining), troubleshooting or tech help,
Travel and Transportation: Do you do a lot of consulting, or offsite meetings? Gas isn’t cheap! Count it, or figure out how much per mile you are spending to travel. Do you attend networking conferences a few times a year? You have to pay for airline tickets, hotels, food, entrance fees and more – it is all a business expense.
Marketing and Advertising: Any money you spend on marketing and advertising is a business expense, including business cards, brochures, any sort of promotional materials, such as swag for a conference, and the conference fees themselves. Now, think about the hours per month you spend actively marketing. Consider how you will pay yourself for those hours as you set your rates.
Are you really considering all the costs of running, and growing a business, as expenses? They all need to be paid for somehow. Consider this as you periodically adjust your rates. You may just find it’s time to revisit your pricing strategy.
What other expense categories do you track in your own business? Share with us, below!
Donna Toothaker is CEO, founder and coach of Step It Up VA Coaching. These highly sought-after VA coaching programs have been created for established, successful VAs who wish to create the 6-figure business of their dreams. Visit http://www.stepitupva.com to receive the free report, Top 3 Mistakes to Avoid in Creating a 6-Figure VA Business.
{ 2 comments… read them below or add one }
It’s also important to check with your accountant on expenses. For most self employed and un-incorporated VA’s in the US, all of your health insurance costs are deductible. When deducting shared expenses for a home office, you have to do so based on the square footage of your office compared with your entire home. You may also be able to deduct mileage for volunteering as well as the miles you use going to the doctor, dentist, the office supply store to get those deductible supplies, etc. How much you can expense depends on if you are incorporated or not – and whether or not to incorporate is a good discussion to have with your accountant!
All excellent points, Brenda! Thanks for your comment!