Are you looking for ways to track your small business expenses? It’s essential to track and manage all of your business expenses properly.
Studies show that tracking business expenses and controlling unnecessary expenditures are some of the biggest struggles that small businesses face today.
When you properly manage your business expenses, it will increase your profitability. Tracking, recording, and analyzing are the most common aspects of financial management. It also leads to accurate bookkeeping, calculating the quick ratio, making forecasts, and more! Knowing where your business is standing financially allows you to track or categorize your business expenses easily.
This article will cover the top tricks for tracking your small business expenses. But let us tell you first why keeping track of business expenses is essential?
Why is Keeping Track of Business Expenses Essential?
Have you ever spent money buying different stuff without taking stock of your finances? Probably not, and that’s the reason why small businesses fail. They have poor cash flow management, so they can’t pay salaries to their workers, or even utility bills and much more! If you want to make your business successful, organize your cash flow to stay on track.
Here are some ways how tracking expenses can benefit small businesses:
- Controlling the costs helps you to be aware of where your cash is spent
- Take advantage of tax deductions
- Motivate your workers with the prompt expense
- Monitoring the company’s profitability
- Improve money management and avoid spending money on unnecessary things
- Optimizing cash flow
What Are Business Expenses?
Here is the list of some common small business expenditures that you may want to encounter:
- Office supplies
- Bank fees
- Contract labor
- Consulting session fees
- Postage & delivery
- Print Marketing
- And much more!
Top Tips To Track Your Small Business Expense
Here is some top to track your small business expenses:
Review & Categorize Your Business Expense Daily
As a small business owner, you should review your business expenses regularly to make sure that your transactions are appropriately categorized. It will help you to make sure your reporting is accurate. If you don’t know how to organize, just note it while doing a monthly or quarterly bookkeeping review. If you keep your business expenses categorized, organized, and up to date, you’ll quickly check the financial condition of your business throughout the year.
Open a Business Bank Account
Tracking, organizing, and categorizing business expenses and handling accounting is much easier if you have a separate business account. It is essential to have a separate bank account before starting any business, whether small or big. Having a separate business account helps you keep your finances organized and make things easy during tax timing.
Moreover, having a business credit card is the best way to avoid business and personal finances. Go to your bank’s website and see whether they offer business cards (debit/credit) or not. If they don’t provide business cards, then having a MasterCard is the option as they offer cards for small businesses. It is best to have a separate card to categorize your business expenses. Here are some benefits of having a separate business bank account:
- Proof of business purchases
- Accurate bank statements
- Having a dedicated business credit card
- No need to spend extra time looking for particular transactions
- Easy to get credit in any necessary situation
Record All Expenses Promptly
It is essential to keep a record of all expenses and income, and you can do it in many ways. One of the easiest and best ways to record expenses is to go digital. In this way, you can easily access all the records and quickly find needed information. And these can be done in the following ways:
- Use dedicated tools or softwares to store digital business receipts with details and important documents, including invoices, tax records, or much more! You can also use real check stubs as they keep accurate information about your salary, pay dates, and taxes.
- Or you can create a digital space in your digital environment such as cloud storage, flash drive, or a separate folder to keep records of your expenses.
Scan Your Business Receipts
Another essential step of tracking your business finances is scanning receipts from business expenses. Scan all the receipts from purchases, especially if you have both business and personal purchases on the same receipt. That’ll surely help you save your time by capturing and filing all the receipts digitally. When you acquire any business expenses, you must snap a picture of them with a receipt scanner. It is crucial to keep all of your receipts if you need to claim something as a business expense.
Must-Know Which Expenses Are Deductible
If you want to save money and keep tracking your business expenses, you must understand which costs are tax-deductible and not necessary while managing your finances. Some standard tax deductions can be home office expenses, vehicle or travel expenses, self-education expenses, etc.
Tracking small business expenses and financial management are the challenges facing businesses today! We want to give you more accessible ways to control your business expenses by providing you with some top tips to track your business expenses. We hope that these tips will surely help you track all of your business expenses and manage your finances.