One of the most popular questions we are asked is how to reduce small business expenses in Ontario. Canada and Ontario have a wide range of taxes, expenses and operating costs and many of them can be reduced or avoided if you are careful. Often your small business in Ontario may be able negotiate your small business banking fees, with proper management you can reduce credit card expenses and if you shop around you may be able to reduce your merchant processing fees by up to half. To reduce expenses you need to re-examine your small business plan.
How to Reduce Small Business Expenses in Ontario
Review your current small business monthly bills. When running a small business in Ontario there are always monthly bills for services that help keep your business going. You pay for your landline and cell phone bills, your office internet, and a collection of different insurance costs. You get these bills every month, but you could be missing out on a bunch of potential savings with just two easy tasks.
Look at what your small business is paying now
To reduce small business expenses start by checking for fees and penalties. Long distance charges, over usage charges and late fees are all common items that are easily go unnoticed and can add up. If the charges are incorrect, you can dispute them, and if they are correct, you can look into changing your small business plan or cutting down in order to avoid fees in the future. Your provider may be willing to wave some fees if you contact them.
Be sure to check to make sure you are being charged the correct amount. A small business plans in Ontario may sometimes have limited time pricing or hidden costs. If you are unhappy with your bill it may be time to talk to your provider or begin to look at the competition.
It is especially easy to rack up a bunch of extra fees and penalties if you are not careful when dealing with the CRA. Every late filing and every incorrect payment you make may come with late fees and penalties applied to your small business in Ontario. Multiple late filings or payments not only result in more severe penalties, but also put a big target on your small business. Also, CRA penalties are double taxed. The penalty is a tax and it is non deductible.
Look at what your small business in Ontario could be paying
To further reduce small business expenses examine what is now available to your business here in Ontario. Your phone plan may have been inexpensive and loaded with features when you first signed up, but that great deal may now be lagging behind another small business plan available. Be sure to take a look at the pricing and features of competitors to see if you are still getting your bang for your buck. If not, you can move onto greener pastures, or talk to your current provider about making a comparable deal. Most providers offering small business plans in Ontario are not going to jump out at you to let you know you are paying them too much for too little.
It is also important to keep an eye out for expense creep. Over time some of your expense will increase in cost. Usually it is just a small change here or there. An extra $10 a month is not going to break the bank, but if you look back a year or two and see you are now paying twice what you used to pay it may be time to look into potential alternatives. These expenses creep up on you over time, and it is very hard to notice if you are not actively looking for them.
Your Small Business Plan: Banking and Merchant Transactions Fees
Ontario Small Business Bank Accounts
There are a number of small transaction fees that can build up quick if you don’t keep an eye on them. Depending on your small business account you may only have a limited number of free transactions, at which point you will pay a fee for each additional transaction. In such a case, if you charge day-to-day items on your bank account, bank fees could be in the hundreds. If you have a cheque bounce or an overdraft on your account you may be charged large fees. If you find yourself paying a lot of extra fees, there is probably a better plan that will save you money in the long run available. Look to other banks business plans, or talk with your own bank about how you can change your account to reduce your fees.
Reduce Small Business Expenses: Credit Cards
Credit cards are a great tool for a small business in Ontario to manage & admin expenses, but can create interest costs and may lead to out of control spending. The obvious one is interest charges. If you do not keep your balance paid monthly, you will be charged interest from the date of purchase. Interest rates on credit cards start at 18%, and if you have built up a balance, it may be worth your time to look into moving your debt from your credit card to a lower interest loan option.
One great use for credit cards for a small business in Ontario is to make reoccurring payments. The only problem is they are easy to set and forget. Some examples are office software, annual memberships, advertising or non-business related expenses like Netflix or beauty items. Over time you may stop using these services, but it is easy to forget to stop payments, and sometimes companies mess up and continue to charge you even after you have cancelled your service.
Credit cards are not all bad though, and provide opportunities to bring money into your business with your spending. Many credit card companies have cards with rewards attached to the spending and usage of the card. Find what type of card and fees work for you. Cards can provide a percentage of cash back on money spent on the card, air travel rewards to cut down on your transportation costs or deals on various products and services for having a card.
Reduce Small Business Expenses: Merchant Processing
Merchant processing allows you as a business to collect payments from your customers with a variety of debit and credit cards. These machines do come at a cost, especially for new business users who lack the history for a better rate. It is important to be keep up on payments and keeping the proper level of volume as this is taken into consideration when renegotiating your second contract or finding a new provider. You could have your costs cut down by half if you are vigilant. We personally have seen clients succeed with Elavon and Moneris, but it is important to shop around and find the merchant processor that works with your business.
If you have found how to reduce small business expenses in Ontario to be of value to you, you may be interested in reading more of our articel aimed at helping small business such as our 10 Business Secrets I Wish Every Client Knew or our 2016 Income Tax Filing – Income Tax Changes You Should Know article. Contact us anytime!