A Practical Guide for Medium-Sized Companies from the Perspective of an Accounting Firm
In today’s dynamic business environment, the question of how to reduce costs without breaking the law or compromising the quality of services is becoming increasingly relevant. As an accounting firm working with dozens of medium-sized service companies, we know that the key to success lies in legal cost optimization – not in cutting costs at any price.
This article outlines which expenses can be effectively reduced, what tools are available to help you do so, and what to be cautious of during the optimization process.
1. What Does “Legal Cost Optimization” Really Mean?
Legal cost optimization doesn’t mean “how to bypass the law,” but rather how to leverage available tools, tax reliefs, legal regimes, and efficient accounting practices to avoid unnecessary overspending. The most common areas include:
- proper classification of expenses as tax-deductible or non-deductible,
- optimization of tools and overhead costs,
- efficient setup of remuneration and employee benefits,
- use of lump-sum expenses or leasing models,
- evaluation of contracts with suppliers and service providers.
2. Key Areas Where Costs Can Be Effectively Adjusted
a) Outsourcing of Accounting and Payroll Services
One of the most impactful cost-saving measures we see in medium-sized businesses is the outsourcing of accounting and payroll functions.
Case Study
A mid-sized service company with approximately 50 employees replaced its internal accounting and payroll staff (two employees with monthly costs over CZK 100,000) with an external accounting firm. The resulting monthly flat fee—including payroll processing, accounting, VAT and control reports—was around CZK 45,000.
The savings exceeded 50%, while also eliminating concerns related to sick leave, replacements, or mandatory trainings.
Beyond cost savings, outsourcing also offers stronger professional assurance and up-to-date compliance with regulatory changes.
b) Equipment and Overhead Expenses
Instead of purchasing technology, vehicles, or other equipment outright, consider operational leasing, which can be more tax-efficient—especially when technology turnover is high. It also allows for better budgeting by spreading costs evenly over time.
Also, monitor smaller recurring expenses like office supplies, software licenses, utilities, and telecom services. These often hide significant monthly losses due to outdated contracts or unused services.
c) Travel Expenses and Remote Work
If your company operates across multiple locations or if employees travel frequently, consider lump-sum reimbursements for certain types of travel. Tax law allows for tax-free travel allowances, provided proper documentation is maintained.
Remote work (home office) can also reduce costs related to utilities, meals, and office leases.
d) Education and Employee Benefits
Spending on professional development—such as technical training, language courses, or soft skills—is often tax-deductible. Using optional benefits (e.g., meal vouchers, culture/sport contributions) instead of traditional bonuses can help reduce payroll tax liabilities.
e) Marketing and Advertising
Many companies overspend on online campaigns without a clear strategy or return on investment (ROI). Rather than increasing the budget blindly, consider:
- analyzing the performance of individual channels (e.g., PPC vs. SEO),
- utilizing options for tax-deductible brand promotion (with documented outcomes),
- adopting performance-based marketing (affiliate, conversion-based).
3. Common Mistakes in Cost Optimization
- Not using flat-rate expense regimes – e.g., in cases combining self-employment and a limited company.
- Incorrect accounting of representation expenses – some costs (e.g., hospitality) are non-deductible.
- Outdated supplier contracts – many companies operate on “autopilot” without renegotiating terms.
- Unintentional legal violations during optimization – such as improper classification of benefits, unjustified expenses, or inaccurate expense categorization.
4. Where to Start?
The most effective approach is to consult your accounting firm. We recommend:
- Reviewing cost centers – to identify the most expensive areas.
- Evaluating current contracts and tax setups.
- Focusing on hidden leaks – such as software licenses, utilities, or neglected benefits.
- Considering outsourcing of non-core or repetitive tasks (e.g., accounting, payroll, IT administration).
5. In Conclusion: Optimization Is Not About Random Cuts
Properly executed optimization is not about cutting everything blindly. It is a strategic process that helps you run your business efficiently, invest where it matters most, and reduce tax burdens legally.
➡ Need Professional Advice?
Our accounting firm helps medium-sized companies discover savings in places they often overlook – all in full compliance with the law.
Get in touch via www.intras.cz or drop us a message – your first consultation is free.