Latest posts by MyCorporation
- 3 Vital Startup Lessons Learned From the COVID-19 Pandemic - December 26, 2020
- 5 Must-Haves for Starting a Main Street Business - November 24, 2020
- 4 Ways Startups Can Save Money During the Pandemic - October 20, 2020
Amid the COVID-19 pandemic, many startups have successfully pivoted their business models to accommodate customers and keep their doors open. These same businesses are also keeping a watchful eye on their expenses and finding new ways to save money.
Saving money during the pandemic ensures more than the company’s survival. It also keeps employees from being furloughed or let go, allowing your talented and valued team members to keep their jobs.
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If you’re currently examining your finances and trying to figure out which areas still have the ability to offer up extra savings, consider budgeting in the following areas:
Think about relocating
Many businesses have made headlines over the last six months for their decisions to take companies fully remote, permanently leaving the office behind. While this approach may work for some businesses, others may not be in the position where they can take their operations completely remote.
However, this doesn’t mean that businesses need to stay tethered to an expensive lease that doesn’t work for them. Take a look at commercial office buildings in your area or in surrounding communities for rent. Are they looking for tenants? Do they offer flexible leasing agreements and less expensive rent? If your business fits the bill, you may consider moving to a new location that is, quite literally, a better fit for your business.
Alternatively, this may be a good time to negotiate with the landlord of your existing building. Reach out and ask for improved rates. Be honest and let him or her know that you are looking at other office spaces, as this often yields a more competitive mindset from your landlord. They will want to retain you as a client (especially if your business has a reputation for paying on time), so it’s a great opportunity to negotiate for better terms this year and in the coming year.
Figure out if you qualify for utility assistance programs
Curbing expenses in any workplace can only be done up to a point. You can purchase office supplies in bulk and go paper-free when possible. However, fully eliminating utility bills for electricity and water is next to impossible for any business.
The next best idea? If you’re struggling to make payments on time or are seeking a way to reduce existing bills, get in touch with your service provider. Explain your situation and see if they are offering any discount or relief programs that may be applicable to your business. Take advantage of these programs, even if they are temporary. The short-term relief will make a big difference.
Hire independent contractors
Hiring employees is usually an exciting milestone for a startup, as it shows that sales are increasing and the company overall is growing. However, entrepreneurs on tight budgets during COVID-19 may consider hiring workers on an independent contractor basis rather as full-time employees.
What’s the difference? A worker for any business must be classified as an employee or independent contractor. This classification allows the business to withhold their income taxes accordingly. It also helps determine the relationship between the worker and business within three categories: behavioral control (directing and controlling their workload) financial control (wages and pay), and relationship of the parties (this may include benefits and insurance — which are available for employees but not independent contractors).
Remember that once you understand the classification for the worker, you’ll need to file documents that allow you to hire them. Here are the forms associated with independent contractors, according to the IRS:
- Form W-9, Request for Taxpayer Identification Number and Certification. Form W-9 must be completed by the independent contractor. This form allows you to request the correct name of the worker and create their taxpayer identification number (TIN). Always keep this on file in the event there are any questions about the document.
- Form 1099-NEC. Form 1099-NEC, Nonemployee Compensation reports payments of non-employee compensation (NEC) that were reported in box 7 on Form 1099-MISC. Business owners that paid independent contractors more than $600 for their services during the year need to complete this form. The business owner then must send this form to two more additional places. A copy needs to be sent to the IRS by January 31. Then, a copy of Form 1099-NEC must also be provided to the independent contractor by January 31 of the year following payment.
Look to the new year for extra savings
We’re only a few months away from 2021, so now is a great time to look at 2020’s overall expenses as well as any expenses from 2019.
Take a look at the areas where you can cut costs. Further, examine anywhere you can get better terms on loans, contracts and any credit cards associated with the business. Now is the perfect time to focus on improving the margins and to take stock in the overall year. Focus directly on your ROI for certain ventures and examine what yields a consistently profitable return. Cut out anything that’s not working — if you haven’t already.
Remember that while many of these changes may be temporary now, you may continue to stick with some of these budget hacks post-pandemic.