The firm should pay down debt with the highest interest rates and make sure that if the business has excess cash, it gets an interest return. Tax-instalment management also is an important area where money can be saved, Stern adds. Firms have to make instalment payments based on the previous year's tax payable or on estimates of current-year tax liabilities, she notes. If a firm underpays on tax, it faces interest on the underpayment of 10 per cent, compounded daily. Worse, those payments are non-deductible.
Money paid to the lender for a business loan is tax deductible.
So don't be in debt to the government and don't harm yourself with underpayments of taxes due. Managing the wage bill is another often-fruitful area of cost savings, Ms. Stern says. When you need employees, examine the cost of overtime versus the cost of hiring temporary personnel, especially from employment agencies. And consider using government programs that pay for or assist in hiring students. Some balance-sheet assets may be unrelated to the company's business, Ms. Stern notes.