Small businesses handle unexpected expenses regularly. Some small business owners like yourself are not prepared when they get hit with surprising costs. As a result, they struggle to pay for necessary operations. If you want to set yourself up to deal with any surprise business expense, you need to learn what the most common unforeseen expenses are. Then, you can effectively prepare for them and keep your business running smoothly. Continue reading to discover common unexpected expenses business owners need to prepare for.
Paying Taxes
One of the most crucial unexpected business expenses is taxes. While all business owners know that they need to file taxes, they are often shocked at the final cost when the tax season starts. For this reason, every small business owner needs to grab a hold of their company’s taxes. Learn about the different components of small business taxes so that you can gather enough capital prior to tax season.
These components consist of federal income taxes, state taxes and local income taxes. However, taxes also vary per business type. Work with a finance professional to determine how much you will owe for taxes this year. Then, you will effectively prepare for this unexpected expense.
Equipment Breakdowns
Business owners also need to prepare for equipment breakdowns. Depending on the type of business you run, your equipment could be expensive to repair. For instance, construction companies usually pay large sums to repair and/or replace their broken machines. In the construction industry, companies do not have the choice to fix their equipment or not. If it is vital to their projects, they need to obtain the capital to pay off the hefty expenses quickly.
Employee Benefits
Moreover, business owners often fail to add employee benefits into their expenses. While paying your employees hourly or salary is crucial to operating a business, most also offer benefits and perks. These benefits and perks often include workers’ compensation, healthcare and retirement. However, you may add other perks such as vacation time to your contracts as well.
These expenses may not seem like a lot when you only have a few employees. When you grow your company, though, you will need to hire more employees. Your expenses will, therefore, rise. Many business owners fail to realize this, making this a common unexpected business expense worth preparing for.
Business Insurance
The majority of business owners are well aware that they need to purchase business insurance. However, many forget that when they grow their companies, they will likely need to acquire more forms of insurance. A business owner working out of their house will not need as much insurance as a business owner who owns a large establishment, manages a warehouse and ships products nation-wide.
As your business grows, you will need to acquire more than just general liability insurance. When you hire workers, you will need to invest in workers’ compensation insurance and medical insurance as well. Prepare yourself for this unforeseen business expense to grow your brand profitably.
Utility Problems
Furthermore, business owners need to prepare for utility problems. The unexpected costs that can step from utilities are seemingly endless. If you rent an office, your electricity could go down. Your internet could go out. Any business owner’s store could have plumbing issues. While some of these expenses may not require business owners to pay large sums, implementing effective utility bill management strategies can help minimize the financial impact of such situations.
However, others are very financially demanding and need to be fixed immediately. For instance, if you own a restaurant and the plumbing goes haywire, you need to get it fixed immediately in order to avoid losing customers. If you do not have the capital to pay for such an expense, you can apply for a quick business loan that offers same-day funding.
Before you can prepare for any surprise cost that comes your way, you need to know which expenses to expect. Many business owners do not expect their taxes to be so high. Some also fail to prepare for equipment breakdowns. As you grow your company, your employee benefits and perks costs will rise as well. The same goes for your business insurance because you will likely need to invest in more plans.
Finally, utility problems occur frequently and can be expensive. Prepare for these unexpected business expenses to grow your brand effectively.