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6 Ways to Cut Overhead Costs

Every business has to spend money in order to make money. Here’s how to keep those ongoing expenses from getting too high and impacting your bottom line.

Take a fresh look at every single expense.

Chances are, some of them have become a habit but can now be either eliminated or achieved in a more cost-effective way.

Re-negotiate supplier and vendor contracts.

  • There may be things in there you don’t need anymore.
  • On the other hand, you may find that buying more services from one company costs less than piecemealing it out to several suppliers.
  • Ask for a better deal from existing suppliers.
  • Shop around for more favorably priced suppliers.

Allocate more marketing efforts to free or low-cost channels.

  • Word-of-mouth and tell-a-friend promotions to existing clients.
  • Social media campaigns.
  • Strategic partnerships with other local businesses.
  • Employee sales competitions.
  • Testimonials from satisfied clients.

Centralize purchasing.

One person in the company should handle it all, from office supplies to phone/internet providers to equipment rentals. This person will:

  • Prevent duplications, unexpected shortages, and confusion.
  • Be good at wangling better deals, concessions, and discounts.
  • Shop around for the best offers.

Re-think your office space.

  • Do you really need to be leasing so much space?
  • Do you have too much inventory/equipment on hand, taking up storage space?
  • Is there another space available that offers equally good access for current and prospective clients at a lower rate?

Control labor costs.

  • Avoid paying overtime by fine-tuning scheduling or converting to part-time employees.
  • Reduce turnover and hiring expenses by maintaining a happy, fulfilling work environment.
  • Cross-train employees to fill more than one role.
  • Prevent time theft with an app that tracks actual hours worked.

Solving the overhead problem is all about baby steps. Chip off a bit here, a bit there, and keep a year-round watch on expenses. It will all add up to some nice, healthy profit margins.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Insuring Your Future: A Tax-Saving Retirement Guide for Insurance Professionals

You spend day after day helping your clients protect their assets from the unexpected. Take a moment today to think about protecting yourself from the 100% expected: your retirement.

As a self-employed insurance pro or business owner, you may not have the luxury of en employer-matched 401K built into your benefits package. That means it’s up to you, and you alone, to prepare for the future.

There are actually four retirement plans for self-employed workers that can help reduce your taxable income while saving for retirement.

Solo 401(k)

If you have no employees other than a spouse, this type of plan is great because of its high contribution limit (up to $59,000 if you’re over 50) and because taxes are paid on withdrawals. Accounts with $250K or more do require an annual report with the IRS, but they are relatively easy to set up initially.

Simplified Employee Pension (SEP IRA)

These easy-to-set-up plans work well for self-employed workers with few or no employees. SEP IRA’s are also ideal if you’re looking to match contributions to profits, allowing you to contribute as much as $53,000 annually. Just keep in mind that if you do have employees, you can’t contribute a higher percentage to your own account than theirs.

Savings Incentive Match Plan for Employees (SIMPLE IRA)

The SIMPLE IRA plan makes sense if you have a small business with a lot of employees. While matching contributions are deductible for you, and most employees don’t contribute, there is the possibility of mandatory matching contributions.  SIMPLE IRAs have moderate contribution limits and require little setup or maintenance.

Defined Benefit Plan

This type of plan works well for solo self-employed workers with high, stable incomes and a desire to put a lot of money away for retirement. Contributions to this plan can be as high as $100K/year depending on your age, and all of those contributions are tax-free until you withdraw. The downside is that Defined Benefit Plans require you to commit to a certain funding level when you set them up — and if you have employees, you must make contributions on their behalf.

No matter which plans you decide to go with, the key is to start now, while time is on your side!

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

5 Accounting Tips for Lawyers: How to keep your numbers in order beyond a reasonable doubt

Can you remember why you first wanted to become a lawyer?

Helping the defenseless, high earning potential, and an intellectual challenge may have been a few of the reasons why. Diving into the exciting world of legal accounting was probably not high on your list!

Whether you’re an independent attorney or own a small to mid-size firm, you face unique challenges when it comes to your business’s financials. And the penalty for not keeping a close watch will be more than a stern look from a judge.

Here are five accounting tips for lawyers to keep your numbers in order beyond a reasonable doubt.

The right accounting tools

You didn’t go to art school to study law – so why are you using general accounting software for your law firm? Most out-of-the-box accounting programs can’t handle the unique financials of legal practice without extreme customization. Whichever software you go with, make sure it can help you manage retainers, trust accounts, and track billable hours by the client.

Avoid double jeopardy (or double data entry errors)

If you’re like most law firms, your management and business accounting are in two separate systems. When data has to be entered into more than one place, the chance of errors increases. Maintaining all of your accounting into a single system builds a stronger money trail and reduces time spent in data entry.

Carefully maintain your trust accounts

Trust accounts are one major way your law firm’s accounting is very different from most businesses. You may often be in receipt of client retainers that don’t actually belong to the firm until the work has been done or handle settlements on behalf of your clients. It’s critical to ensure that funds are kept separate and reconciled monthly so you can always be ready for an audit.

Keep your firm’s expenses in mind

One thing your firm does have in common with other businesses is that there are costs involved with keeping the doors open. Your office lease, phone, internet service, and more are all part of the cost of doing business. Tracking these expenses separately can help you plan for the future and inform the way you bill clients.

Track income by practice area

If your firm specializes in more than one area of law, tracking income by practice type can help you understand which area generates the most revenue and how to make changes that increase profits.

Remember, you’re a lawyer, not an accountant – and that’s ok! Using the right software and having a bookkeeper who understands the in’s and out’s of legal accounting can help you maintain order in your books while you maintain it in the courtroom.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.