4 Tips for Tracking Business Expenses
Keeping track of your expenses is crucial for every business, but especially for small business owners. In order to have a successful and lucrative business, you need to know how much you are spending on various expenses, like advertising, insurance, rent, etc. To ensure you have more money coming in than you put out, you need to be meticulous with tracking and budgeting your business expenses. No purchase should go unaccounted for, even if it is something insignificant! Keeping track of all these expenses can undoubtedly be overwhelming, but following these 4 tips for tracking business expenses will make the process a little bit easier:
1. Separate Business and Personal Expenses
When you are starting your own business, it might seem easier to just combine your personal and business expenses. “I’ll just separate them later on” you tell yourself, and then years down the road you find yourself spending hours sorting through bills trying to figure what expense is personal and what is business. Instead of putting this off, separate these expenses in the beginning. Open specific accounts for your business, including a business credit card and checking account. While it might seem unnecessary at first, it will definitely pay off in the long run when you are able to easily differentiate between the two during tax time. It is also important to know what counts as a business expense, so that you can deduct it from your taxes. Expenses like gas, rent, and office supplies can often be deducted, so make sure you differentiate between what is personal and business.
2. Check Your Bank Account Frequently
Staying on top of your purchases and checking your bank account frequently is a good way to catch any mistakes or fraudulent charges. Maybe you accidentally got charged twice for a purchase, or maybe there is an unauthorized withdrawal. Or maybe there is a large purchase that you did not make at all. Checking your bank account often ensures that you will be on top of these errors and stop them from escalating. It is also a good way to keep track of your spending to see what expenses you need to reduce. It is also important so that you always pay your bills on time and avoid any late fees. You can use an online bill pay service to simplify this process. This will keep your payments organized and ensure you will never miss a deadline. In today’s digital age, it makes sense to have all your finances and banking organized online for easy access.
3. Save Receipts
It’s imperative to save every receipt when it comes to tracking business expenses. Nowadays, many receipts are digital, but that does not mean you can’t keep track of them. Save all receipts, paper or digital, and keep them organized in a folder so you can easily access them. There are many mobile apps that make keeping track of receipts and subscriptions easy. If you go out to lunch with a client, take a picture of the receipt with the app and store it in your phone for easy access later on.
4. Use Accounting Software
Accounting software is very beneficial for small business owners in order to keep track of their payments, profitability, and taxes. There are various accounting software services out there that are designed specifically for entrepreneurs to more effectively run their business. Using this service will help you sort expenses, keep track of receipts, manage your taxesc, and run your business as a whole.
Being a small business owner is a stressful experience. You have many responsibilities, but using the proper tools and resources to track your expenses will be a weight off your shoulder. Tracking business expenses does not have to be difficult! It might take a little bit of practice to get it down, but soon enough, you will be organizing and documenting your expenses like a true financial wizard.
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