Knowing how and where you spend your business money is important. Read on to learn how to track business expenses and manage your funds.
You are not in business because you want to lose all your money, but because you had a business concept that you thought would make a difference and would be profitable.
The idea for your business is only a part of how you become and stay profitable.
Managing the finances is just as important as the rest of your business, and in fact, it is probably more important.
Your company means a lot to you. Maybe it’s everything to you. But if you don’t know how to track business expenses right, it won’t be your’s for long.
6 Tips on How to Track Business Expenses
To learn more about to keep your finances on track, please read on. Listed below are 6 suggestions for creating a better system for tracking your companies finances.
- Company Bank Accounts
If you are a proprietor with a start-up business, you might not have made it a priority to segregate your business and private funds.
If that is true, this is something you should not put off. Place all your small business income into a company account. Then use a company credit or checking account for any business-related purchases.
You can transfer money from one account to another as required, but drawing a clear line between the two accounts can help you keep track whether you are making company or private purchases.
What type of company bank accounts should you get? A checking account that provides monthly statements and sends your canceled checks to you will provide you with hard copies of expenditures.
Business statements make your document management easy. Another way to simplify bookkeeping for small business is to use the memo on the front of each check to document the business reason for the expense.
Establishing company bank accounts will also grow your small business credit, and this will be convenient if you may need funding from someone like Bonsai Finance for the long term.
- Credit Card for Business Expenses
Using your personal credit cards for business purposes will quickly drop you in a management quagmire.
A company credit card simplifies your small business record management by helping keep your personal and business expenses separate.
Having company cards, on top of helping you keep private expenses separate, will also make your company look more professional.
- Keep Your Receipts
When you get a receipt for business-related purchases, save them somewhere safe until you can put them in a file, organized by the month and year.
If you are audited, you might need these receipts as proof of your company purchases.
There are still companies around that keep receipts that don’t have anything on them except for the date that the product was bought and how much it cost.
That is not very helpful if you’re looking at a receipt hoping to determine what the company expenditure was and what category it fits into.
When you get a receipt, examine it and note the relevant details on it, for example, what the receipt is for along with the cost category.
- Use a Calendar to Stay on Track
Take advantage of an internet calendar to track your expenses as they happen. An internet calendar tool such as Google Calendar may be used to install alarms for one-time or recurring expenses.
You can use the occasion type to write down the sort of expenditure, such as utilities, lease, or builder services, as well as the recipient of funds.
You can set up alarms to let you schedule future expenses until they’re due, and you’re going to have the ability to print out the whole calendar for reference when the next tax period rolls around.
Maybe you did not know several online calendars, for example, Google Calendar, can sync with your mobile phone, which means that you may also enter costs on the move.
- Accounting Software
Most bookkeeping software applications provide alternatives to make expense categories and connect them to line items in your tax forms, which will lower the time spent on preparing your tax returns.
You can also use it to create profit-and-loss statements, which means it is simple to evaluate the fiscal health of your business.
Using applications to track company expenses can save a great deal of time when you have to file your taxes.
With their ease of use, availability from cellular devices, and meager cost, new cloud-based small business bookkeeping software bundles can substantially simplify finance management.
For approximately $10/month, many applications have fundamental starter packs for freelancers and proprietorship’s, such as invoicing, cost tracking, and easy reporting.
Consider the benefits of having the ability to, in an instant, send a statement directly from the smartphone, have an image of a lunch receipt with a customer and set it as a cost, or monitor billing cycles with an integrated timer.
If your business is growing too fast for you to monitor all your cost accurately, then you might need to think about hiring a bookkeeper.
A contractor might be a good option to start, to devote a couple of hours each month going over your receipts and bills and monitoring them in your accounting program.
- Maintain a Mileage for Business Travel
In the event you utilize any of your vehicles for company purposes, a mileage log is going to be a big help.
Make note of the miles on the odometer at the start of the year then enter the mileage every time you use the vehicle for a business reason.
Keeping your mileage log in your car will make this convenient. In case you’ve got more than 1 automobile that you use for business purposes, keep a mileage log in each car.
Make Your Accounting Work for You
Knowing how to track business expenses is important if you are a business owner. If you have a plan and the right tools, you can make your accounting process work for you.
If you don’t, then you will struggle to stay profitable because you will not be able to track where all the money is going and where it is coming from.
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