05 Feb 7 keys to reduce the expenses of the self-employed
With the recent increase in the contribution bases, and therefore in the quota, many self-employed will be thinking: “it’s time to pay more”. And therefore, compensate by saving on other expenses. In this article we leave you with the keys to reduce the most common costs.
Pay suppliers, collaborators, invest in improvements in the local or web, supplies such as water and electricity, gasoline … every month, bills knock at your door. Indefectibly. And now, moreover, the price has risen and, with it, the quota. So many of the more than 3 million self-employed Spaniards will have a common thought: how to reduce the expenses of the self-employed?
If there is one thing we are sure of, it is that there is no magic formula, valid for everyone and in all situations. However, it is possible to establish a series of general measures aimed at cutting the expenses of the self-employed. Specifically, we want to give you 7 keys that can help you. Perhaps not all of them are applicable to your case, but at least some of them are:
1. Control of expenses
It is often said that what is not measured cannot be improved. And also, that even a stopped clock gets it right twice a day. Therefore, even if you think you have the perfect estimate in your head and think that it is not necessary to have absolute control of expenses, it will be much easier to cut them if you have them fully identified. I’m sure you’ll get more than one surprise.
For this reason, the first recommendation is clear: control your expenses in detail, the fixed ones and the eventual ones. It is the initial step to be aware of which expenses you can cut, which you can renegotiate and which are compensable, or not, with the expected income.
Our suggestion is that all the movements are recorded and that there is a person who, among his functions, has the control of the expenditure.
2. Deductions from self-employed expenses
A key point in a self-employed person’s savings and cost reduction plan is to know, to the letter, which disbursements are deductible under current legislation. In this sense, in recent years there have been changes that should be taken very much into account. For example, in recent months you have been able to deduct personal income tax from per diems and maintenance, as long as it is:
Is an expense linked to your activity and generated in working days
You are in possession of the invoice associated with the expense
The payment has been made telematically
But dietary expenses are not the only expenses of the autonomous deductible. Amongst others, this category includes those incurred abroad, contributions, bank charges, certain taxes, insurance premiums, salaries or those associated with commercial contracts, all of which do not need to be justified with an invoice; and others that do need to have proof, such as the rental of the premises, maintenance and conservation expenses, those associated with external professionals or the mobile phone, among others. Also, of course, the costs of the vehicle.
Deducting all these expenses can help you balance your accounts at the end of the month and at the end of the year, as you will pay less tax.
3. If you need to contract, consider the bonuses
You may need one or more hands on your business. It will be at that time when you should consider hiring. Well, you can do it in the usual way, taking into account, of course, the costs associated with hiring, or assess some of the assumptions in which there are bonuses for this operation. The truth is that, after the last Royal Decree Law, some of these grants have been repealed, so it is not superfluous to review which are the cases that are currently subsidized:
Victims of gender-based violence or terrorism
Relatives up to the second degree of consanguinity
People in social exclusion
Beneficiaries of the National Youth Guarantee System
Unemployed persons under 30 years of age who are unemployed and have a training contract.
Internship, substitution or relief contracts for workers coming from temporary employment agencies in companies with less than 50 workers.
4. Plan your savings
Starting the exercise by estimating the year’s income is not uncommon. In fact, it is rare for an entrepreneur or self-employed person not to do so. However, not everyone develops a savings plan. This tool will be very useful not only to know when you will have enough money available to make an investment or open a new line of business, but also to control your expenses in a more detailed and, above all, more conscious way. Because the savings plan depends on both income and expenses.
5. Stay tuned for any bonuses you may be entitled to
Although you are probably already on the radar, the fact is that the self-employed group has several bonuses. These depend on multiple factors or situations. Here are some of them. If you are in one of these cases, you should know that by taking advantage of them you can reduce your tax expenses:
Flat rate for the self-employed. Until last December, 50 euros per month were paid. With the new Royal Decree Law, the flat rate rises to 60 euros. Despite the increase, it is far from the 283.3 euros per month paid by a self-employed worker who contributes to the minimum base.
Women under 35 or men under 30 can also take advantage of the flat rate.
Maternity and paternity leave
Self-employed persons with a degree of disability greater than or equal to 33%.
Victims of gender-based violence or terrorism
Self-employed persons in the agricultural sector
Self-employed collaborators or family members
6. Digitizes advertising and daily management
Digitization is not one of the main concerns of the self-employed, professionals and small businesses. However, it is one of their priorities to be economically sustainable. And that means reducing the expenses of the self-employed, something to which they can contribute, and a lot, digitizing some of your processes and tasks.
For example, to leave behind the file cabinets full of contracts and documentation of clients to store them in Google Drive or in a free CRM like Zoho or Suma, because both have versions without cost. With this measure you will save on paper, but also on office supplies. On the same line, digitizing your invoices will have the same benefits.
In addition, you will already know that there are many procedures with the Administration that you can already carry out online. For example, through the RED System. In this way, you will avoid trips to AEAT and Social Security offices, with the savings in public transport or petrol tickets that this entails.
Finally, if you are determined to advertise your services, remember that social networks are a very effective channel. Surely, more than other traditional ones such as wedges on local radios or posters. Keep in mind that the possibilities of segmentation to reach the target audience that social platforms have do not have other means. It will therefore be a more effective, cheaper and more returnable way of advertising. Here are some clues to create your first ad on Facebook and Instagram.
7. Saving energy and supplies
This point is perhaps the best known of all the self-employed who, like you, want or must reduce their expenses. However, it is not superfluous to remember that it is necessary, whenever possible, to spend a part of your time looking for and comparing the best energy suppliers and the offers that best suit your needs. Energy is one of the most important costs for businesses, so all help is little to cut.
In addition, implementing a series of good practices in your office or premises will help you reduce costs.
Applying these 7 keys or as many as possible to the day-to-day running of your business will allow you to fulfil a purpose that is as recurrent as it is difficult to achieve: pay less to improve profitability.