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Consumption is the most prominent and hidden costs can be determined but the straight-line or reducing installment
dont leave minor expense on expense sheet
Hidden business expenses are costs, as you might expect, that are difficult to predict. Such costs can sink a young business, so every effort should be made to anticipate them. You might get lucky and incur very few hidden business expenses. But the more pessimistic among you might prefer to have a contingency fund set aside to meet the unexpected. If they don't materialise then the worst case scenario is that you will have a useful reserve to go into the next financial year with.
The list below covers some of the most common hidden expenses:
1) Legal costs of incorporating your business: These can range from a few hundred to a few thousand pounds. If your business is new then get a breakdown of costs as soon as possible
2) Bad debts: You can't always predict if and when a customer will fail to pay. There are also fees involved and wasted resources chasing debtors.
3) Insurance costs to protect business assets and provide public liability insurance: For many companies this is mandatory but premiums can rise as your business grows or circumstances change.
4) Insurance to cover the cost of dealing with a VAT or tax enquiry: If the tax authorities are either unhappy with your accounts or pick you out at random for a full inspection, you will have to meet substantial extra costs for accountants fees. Hopefully you are fully covered but entrepreneurs often underestimate how much they need.
5) Employment tribunals: These can be very costly for business owners. Spend time understanding things such as employment law and make sure your contracts are in order.
6) Broken assets: Wear and tear and clumsy staff means that nothing lasts forever. Think carefully about what things you want lying about the office.
7) Petty cash: Limit this to set amounts each month and ask staff to take receipts for additional transport and to make expense claims.
8) Telephones and communications: These shouldn't really be hidden business expenses but in an information age with internet, mobile as well as fixed lines they can be harder to monitor. Also be wary of staff making expensive personal calls and set out a policy of what is and isn't permissible.
9) Utilities: Similarly to the above these are hidden business expenses but can rise unexpectedly, particularly as your business grows.
The best advice in all of these is to allow for some budgetary contingencies as not all will be avoidable. But it is also wise to monitor and measure your costs regularly and to set robust but practical policies in place. Also remember to communicate with staff and to practice what you preach as others will follow your example.
I would prefer budget for certain Key Expenses by Intensive care and Effort and arrive conclusions based on that, and list out the results. It will be revised from time to time to make it more standardized and apply the findings whenever it becomes necessary.
E.g. Budget for an individuals expenses other than Salary and Perks to arrive at per employee extra expenses. Similarly other key expenditures will be budgeted other than the real out of pocket expenses.
agree with mr georgi answer
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