The Payroll Tax Holiday will be ending this December, returning the amount of Social Security tax taken from every pay check to the 6.2 percent it was at in 2010. Along with this, it is quite possible that the Bush tax breaks implemented in 2001 and 2003 will end in December as well. The reduction of income that will result could create a loss of revenue for some businesses. With this in mind, it is best to start making changes now to minimize affect the end of the tax breaks could have on your company and employees. To help businesses prepare, here are a few very effective cost cutting tips.
- Go Green. People often associate the act of going green as a more costly route because eco-friendly products can be more expensive, but people often forget the foundation of conservation: doing more with less. This can mean printing less or on both sides of the paper, adding timers to the lights in your office and completely turning off computers at night. And although more money can be spent on eco-friendly products, the reduction operational costs like energy, paper, and water, usually results in overall savings.
- Spend Wisely. Be mindful of your spending and, if need be, develop a system to determine if the cost is really worth it. Plans to repaint or move offices, buy new equipment, hire extra employees can wait. Commit to expenses that are necessary to run your business through marketing, sales, operations, etc. In all other scenarios, it is best to wait.
- Talk It Out. If you want advice on how to lessen expenses within the company, be sure to communicate with all employees. The people on the forefront of the business every day may have cost-cutting suggestions that you would be unable to see without their assistance.
- Negotiation is Key. Since the recession began in 2007, many businesses have been trying to cut costs and negotiate better deals in every aspect of their company. Suppliers are often willing to lower prices for loyal customers because they would rather keep your business for a little less than lose it completely. This premise is applicable to all expenses, big and small. You have nothing to lose and everything to gain by asking.
- Invest In You. One way to reduce unnecessary spending is to invest in your current employees and new-hires more. This may seem counterintuitive, but the better you train your employees, the fewer mistakes they make; even smaller mistakes can add up within a company. Depending on company size and industry, eliminating employee errors and/or improving productivity can have a huge impact on your bottom line. Creating a mentor program can further reduce hard costs because newer employees are trained by well-established, productive employees and not an outside party at additional expense. If you are hesitant on this issue, think of this… A CFO asks his CEO, “What happens if we invest in developing our people and then they leave the company?” CEO answers, ‘What happens if we don’t, and they stay?”
Please check back later for a list of cost cutting tips that can help offset this tax increase for employees.