As I mentioned before, I decided this was the year I would write an eBook on reducing expenses in your business.
It probably won’t come as a surprise that starting this project has got me thinking about the topic even more than usual. One thing that I find interesting is the way a lot of business owners view expenses.
Somewhere along the way, the term “business expense” has been replaced with “free money”. People think that as long as they can write if off as an expense, that they don’t need to budget themselves. Why does that make sense?
I think it might be something learned from submitting expenses as an employee. When you were an employee, maybe you were allowed to bill the company for your business lunches, or your travel expenses to a trade show. Back then, it wasn’t your money, so you didn’t worry about saving a few bucks. Heck, maybe you even added a few personal expenses into your report. It’s not your money, why should you worry about it?
Guess what, it is your money now! You’re the boss, so the person you’re cheating out of money by spending lavishly on silly things is…you.
As a bookkeeper, it’s not my place to interrogate you about what is and isn’t a legitimate expense. I don’t really know if the $3000 in meals you charged to the company Visa were all really meetings. I have my doubts that you went to Atlantic City for a lawnmower supplies conference, but that’s what you told me, so my job is just to record the details I’ve been given. Sure, I could press the issue, and give you advice on what you should do, but at the end of the day it’s your business. If you tell me that’s what you spent, then ultimately it’s up to the government to decide if what you claimed is reasonable.
Whether or not you are allowed to claim these deductions is completely beside the point.
The goal of any for-profit business is to make money. The more you make, the more you can put back into the business. Keep up this golden cycle, and you’ve got yourself a great retirement package someday, and a wonderful legacy to pass down to your next generation.
Or, you can keep taking the afternoon off to golf and claim it as a sales call. Then, when it’s time to retire, you’ll have a few bad golf stories and a neglected business to pass down to your kids. Won’t they be excited!
Just remember this. If it’s your small business, then it’s your retirement you’re spending. As such, treat your business spending the way you’d treat your own. If you wouldn’t spend $5/pen to have your family name printed on the side, why are you doing it for the pens in your home office?