One of the simplest ways, for the busy small business owner, to track non-essential expenses is to name accounts for expenses which are not critical to the production or selling of goods.
One such group of expenses is the amount of fees and dues paid to various associations. These amounts soon accumulate because of impulsive actions. You know that kind. The ones resulting from, "it seemed like a good idea at the time." They're not unlike the accumulation of stuff brought home from hardware stores and dress shops.
You join associations in your industry to keep apace of your competitors. You subscribe to your industry's publications for the same reason. You subscribe to every local association because some recruiter convinces you it is a good thing to do. You know how it accumulates.
Do you bury such incidentals into 'Miscellaneous Expenses?'
Having an expense named, "Association and Publication Fees," will identify these expenses that are 'good for business' and not direct costs for generating revenue. Thus identified, you can assess the appropriate ratio.
This is not to say these relationships are not important for long term survival. The point is these expenditures can easily grow out of proportion to other expense categories.
Fortunately, we had such an account because that, too, seemed like a good idea. On one annual statement this account had risen to more than ten percent of expenses. This prompted a review. It was difficult deciding which memberships to eliminate. So, we decided to cancel all but the one that was deemed essential to producing revenue. Our objective was to see which ones were missed.
Our letter explaining our cancellation was politely worded and well received. During the ensuing years we rejoined only a few. The greatest benefit came from our subsequent precaution of carefully examining our motives and rationale, before joining associations or ordering subscriptions.
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