The Blog Of TL Wall Accounting

Determining Business Expense Needs Vs Wants

In the last quarter of every year, all companies start to take a look at their income. If they’ve had a profit, they start thinking about ways to spend some of it before the year ends so they can write it off their expenses.

Overall it’s a great strategy. If you haven’t had to spend a lot of money during the year and you have a nice profit, it’s the best time of the year for purchases. You could even possibly save money because many businesses have sales in the last quarter of the year because of the holidays.

Even so, especially for business items, owners need to determine their needs more than their wants. Wants are fine if you had a wonderful year, but you never want to overly spend money you don’t need to do, while acknowledging that there’s some things you should spend money on that will help your business in the new year.

Let’s take a look at some of these determinations shall we?

The first thing to look at is your technology.

Is your computer up to snuff as it pertains to software? What about RAM (random access memory)? Most current operating system?

These are important factors if your computer’s starting to run slow or you’ve tried adding upgrades that turn out to be incompatible with your system. If you know how to take care of your computers (this includes laptops) they can last 10 years or more. If not, you should probably start thinking about changes around 5 years.

You should view software the same way. What works for a few years might be obsolete the next. Yet, lots of software is good for more than a decade, so if it still works for you hold off until another day.

Smartphones have become a valuable business tool, but many people get caught up in the hype of buying a new one once a year. Not only is that an expensive proposition but it’s unnecessary for those of us who know how to take care of our phones. Many large malls have multiple kiosks with people who can repair your phone at a fraction of the cost you’d be charged by the people you bought your phone from, so it makes great fiscal sense to keep your phone as long as possible.

Office furniture and supplies is interesting. These things don’t go out of style, and you’ve probably already replaced whatever you ran out of. However, even though they might not go out of style, what you have might not work as well for you anymore. Even though desks and chairs can be expensive, it might be worth taking a look at other options that fit what you do better, especially if you spend most of your time there.

File cabinets are standard for businesses that have been around for a while, but they’re also probably heavy and take up a lot of space. These days newer businesses are using clear plastic bins, which offers the ability to see what’s in them without having to open them all the time. Still, if what you have works for you then it’s an expense you might not need to incur.

These are only a few things to think about. There are things like cars, clothes, monitors and machinery that might need to be considered. The basic principle is to take care of your needs first before splurging on things you want.

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