Small Business Taxes & ManagementTM--Copyright 2008, A/N Group, Inc.
Virtually every business has areas where costs can be reduced with little or no pain. In fact, most of the steps mentioned below should be considered even if the business is not in trouble financially:
Take back computers (especially laptops) from ex-employees and stop business services (e.g., cell phones) for them. As for retrieving equipment from telecommuters such as fax machines and cheap office furniture, ask the employee if they'd want to purchase the items for a nominal amount.
Scrutinize all service charges. Re-evaluate your needs carefully. Some service providers may offer you a special deal for minimal service rather than lose you completely. Also shop around; they've been many changes in phone and internet services in the past few years. The same goes for maintenance contracts on equipment. If your equipment is underutilized and/or not critical to your operation, you might want to cancel maintenance contracts or consider downgrading the service option.
Put off certain purchases. Look first at deferring purchases that won't impact operations, like the latest computer software. Do you really need those new features?
Sell old equipment. You may be able to raise cash (and generate a tax deduction, depending on your basis in the equipment and selling price; caution, selling at a profit can add to your tax bill) if you sell underutilized equipment. If you can't get much, does it make sense to keep the unit as a reserve? Caution. You won't be able to get a tax deduction for worthless equipment unless you abandon it entirely. That means a call to the scrap dealer.
Check leased equipment. Incurring a penalty for canceling a lease may be less expensive than monthly payments on unused equipment. Consider negotiating a deal with the lessor or trading down to a cheaper unit that's more in line with your needs.
Checking supplier invoices. Time spent looking at the disbursements journal and other detail records can pay off. You may find you've been billed for services not delivered or needed or that you have consultants you don't need.
Bring back outsourced work and do it in-house. If employees aren't fully utilized, this makes sense. But before bringing it back, see if the outside provider will give you a better price and compare that to the price of doing it in-house.
Review your insurance policies. If you have less equipment, fewer employees and lower sales, you may be able to get the premiums lowered.
Sublet extra space. If you don't need all the space you're renting, maybe your landlord will 'buy it back' or maybe you can sublet it.
Reduced perks. Weigh the savings against morale and productivity declines. Making employees who work from home pay their own phone bill will generate bigger savings, but simply cutting out special features (such as call waiting and forwarding) will generate substantial savings without a drop in morale. Some low-cost perks that get high marks are flex time, casual dress, free food/beverages (coffee and donuts) and company discounts.
Your CPA and attorney will have additional ideas and so will your employees. all but the most naive among them would know how the company's doing, and they'll have suggestions on how to save costs, particularly if it would help them keep their job.
Copyright 2008 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject.--ISSN 1089-1536
--Last Update 04/16/08