Apart from paying rent, what other office costs should we be aware of?

Although rent is one of the most significant expenses associated with running an office, business owners must also be aware of other common expenses and of their impact on the day-to-day operations of their business.


Business rates and service charges

Business rates are a type of tax levied on non-residential property that were introduced in 1990. These taxes are collected by local authorities and vary depending on the rateable value of the property in question (the annual rental rate applicable to the property). Rating lists are reviewed every 5 years and the applicable rating lists are published by the Valuation Office Agency. Commercial properties in Scotland and Northern Ireland are also subject to business rates, although in these areas they are calculated differently. You can expect to receive your annual business rate bill in March-April, and the bill will indicate which payment plans are available. If you have any doubts about the how much you should be paying, check the current business rates applied to offices similar to yours by visiting this website.

You may be eligible for a business rates discount if you own a small business whose rateable value is under £12,000 (Small Business Rate Relief, which can offer discounts of up to 100 per cent), or if your business is in an Enterprise Zone (with maximum discounts of up to 100 per cent or £275,000 over a period of 5 years).

Service charges are different from business rates in that they are charged by the building owner or the landlord. These charges are in place to cover the cost of maintenance and repairs to the exterior of a building and to common areas (lifts, corridors, etc.). The exact amount of payable service charges is often defined in the lease or letting contract. Although there are no standard service charges, office occupiers in London pay an average of £9-13 per sq ft per year.

Utility bills

Unless your business is run through a virtual office, you will have to budget for utility bills, including water, sewerage, heating and lighting, Internet, and telephone. Commercial utility bills are far from standardised, but you can find some useful guidance by checking the latest energy and water price statistics.

Staff

If you employ staff, their salaries will likely be one of your major expenses, along with rent. In addition to regular wages, you will need to take into consideration the cost of pensions, bonuses, statutory sick pay, and any benefits package that may apply, such as private medical cover, help with childcare costs, or income protection. If you use an agency to source staff or contractors, agency fees will need to be added up to your monthly expenses.

Insurance

All businesses that employ staff are required to have Employer's Liability Insurance. Motor vehicle insurance is also mandatory whenever company cars are used. In addition, you may want to budget for additional insurance, such as public liability, professional indemnity, building and contents, fixtures and fittings, stock cover, and legal expenses insurance. Premiums vary greatly, as insurers take into account things like the building location, its age and condition, payroll estimates, sales volume, etc.

Office equipment & travel

Office equipment will also need to be accounted for when preparing a realistic estimate of business costs. This may include anything from office furniture to computers, printers, copiers, telecommunications systems, leased equipment, stationery, and other common office supplies.

Many businesses will also have to budget for travel expenses, such as those incurred by business trips (accommodation, meals, mileage, etc.), parking fees, and any costs associated with company cars, such as commercial vehicle insurance, fuel, repairs and maintenance.

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