When you do your taxes each year (or run a monthly profit/loss statement) you discover how much income you have netted through mystery shopping. However, there are spending traps that can cause your mystery shopping to be less profitable, or even to result in a net loss.
Here are suggestions to keep you out of the red and in the black, including how to spot hidden spending that does not show up on your tax return, but can make your mystery shopping less profitable.
Keep detailed records of all your expenses. Write down expenses (or put the receipt in an envelope or folder kept for that purpose) immediately. If you do not record expenses as they are incurred, you will surely forget at least some of them. Also, the IRS expects that you will keep daily logs of expenses such as mileage. They do not want you to reconstruct your mileage and other expenses at the end of the month or, worse, the end of the year.
Receipts are not needed for every expense, but it never hurts to have them. Small expenses, such as parking meters and tolls, photocopies, etc. can simply be recorded in your expense log. Be sure to include the date, the amount and the business purpose of each expense.
Although expenses are deductible, do not incur an expense just because you can deduct it. If you buy a piece of equipment for $100, you can deduct the $100 from your income. This will reduce the tax you pay, but not by $100. Your tax savings may be about 20% to 50% of the amount you spent. That is a nice way to reduce your taxes when you must spend money in your business, but it is a foolish waste of money when you buy things you do not need just because, “it’s deductible.”
Keep spending within reimbursement limits. Although there are times when it is necessary to go over the allowed amount, or when you may make a conscious decision to spend more, do not exceed the reimbursement limit due to carelessness. Keep tabs on your spending.
Do not think of reimbursements as “free money.” I used to do a lot of grocery store shops that had a fairly generous reimbursement. Some shoppers looked at those shops as an excuse to buy expensive luxury items they would not usually buy, simply because they got the reimbursement. I always figured that if I used my reimbursement to buy caviar, I would have to use “real” money to buy bread and milk. So when mystery shopping for grocery stores, I limited my purchases to items I would buy no matter who was paying. Reimbursements are part of your total compensation. Use them wisely.
And that brings us to another spending trap: When you spend a lot of time in stores, you may spend more money. You see that cute little thing that you just have to have and, before you know it, you are buying stuff you do not need. Be especially careful of impulse purchases. When you see something you think you have to have, wait at least a day before buying it. By then you will probably forget all about it.
Mystery shopping can make businesses more successful because you get better results when you measure the results. That means that when you pay attention to service and quality, they tend to get better. You can get better financial results in your business by paying attention to where the dollars come from and where they go.