If you are self-employed, you're likely always looking for ways to help cut your business's overhead costs to improve your profit margin. However, with the prices of many consumer goods and services continuing to rise, you may find it harder than ever to keep your costs low. Fortunately, there are a number of ways a savvy shopper can stock up on business cards, checks, accounting software, and the other office supplies you'll need to keep your home business running smoothly. Read on to learn more about some of the most cost-effective ways to purchase office supplies, as well as some little-known home office deductions that may help you further lower your business's overhead costs.
How can you keep the cost of your office supplies low?
One way to immediately cut your office supply budget is to evaluate which of the supplies you purchase regularly are helping you improve your business and which ones are having a neutral or even negative effect. For example, if you find yourself spending a significant amount of money on tax preparation (or worse, on penalties for underpaying your quarterly estimated taxes) but have an entire stack of unused ledger books you bought with the intention of using to track your business's profit and loss, you may want to invest in some business accounting software instead. While this software may be more expensive than the ledger books you've been purchasing, in the long run, this software should help you significantly reduce your out-of-pocket costs.
You'll also want to avoid investing in personalized items (like business cards, checks, or business signage) if you're planning on changing your business's name or structure in the near future, or if you're currently on shaky financial ground. Unlike other office supplies, personalized supplies won't be able to be resold if you do end up liquidating your business.
Once you've narrowed down the list of items you do need to regularly purchase, you'll want to ensure you spend as little as possible on these items. You should be able to subscribe to coupon mailing lists or sale alerts to help determine the best time to purchase these items. For infrequently used items, you may even be able to request free samples from the manufacturer to help tide you over until you spot a good sale. And mail-in rebates can often serve as a great way to try a specific brand or product for free (or nearly free). Contact several suppliers for more information on ways to save.
How can you maximize the tax benefits available for your home business?
Another way to help cut costs for your home business is to take full advantage of all available tax deductions. While you may already know that you can deduct from your federal income tax return some of the costs related to running a home office, there are a number of additional tax savings of which you may not be aware.
- Office supplies are a dollar-for-dollar deduction.
Every cent you spend on office supplies is a cent you can deduct from your business's revenue at the end of the year. For example, if your business grossed $50,000 but you spent $5,000 on office supplies and the maintenance of your home office, you'll only be taxed on $45,000 worth of revenue.
- You can choose to deduct or depreciate certain office supplies.
If you're purchasing some more expensive equipment that you plan to use for years, you'll want to speak to a tax accountant. In some cases, it may be more beneficial from a tax standpoint to deduct the entire purchase price of the item during the year you purchased it; in other cases, you may be able to reduce your tax liability for several years to come by depreciating the asset over a set period of time.