How to Keep Track of Business ExpensesLindsay Chambers
When you run a small business, you have so many tiny details to juggle that it’s easy to lose sight of the big picture. Amid all your other responsibilities, expense tracking is worth your time because it can help you analyze your business’ financial health and forecast future growth.
Since so many businesses fail due to cash flow issues, it’s vital to have a way to predict upcoming expenses and see where money moves in and out of your business. Staying current with accounting and bookkeeping throughout the year is also one of the best ways to avoid headaches when tax time rolls around again. Here are our top four expense tracking tips.
1. Save Your Receipts for Business-Related Purchases
The IRS allows entrepreneurs to claim essential business expenses on their taxes, so file the receipt whenever you pay for a subscription or buy a new piece of equipment or furniture. If you ever get audited, the IRS will expect to see receipts for each purchase you claimed, and it’s easiest for everyone if you have a clean digital record to present.
2. Use Accounting Software
If you’ve been relying on spreadsheets to manage your small business books, it’s time to simplify your life. Accounting software can take the manual work out of expense tracking and ensure accurate calculations. Look for a program that generates automated reports, so you can see your financial status at a glance and use it to make wise decisions. Don’t forget to categorize each transaction – that way, you can sort your reports by type to see where you are spending the most money and identify opportunities to save.
3. Open a Separate Bank Account for Your Business
When you pay for everything with the same account, your financial picture can quickly get murky. Simplify expense tracking, bookkeeping and tax filing by setting up a dedicated bank account and credit card specifically for your business. Then, you’ll never have to separate business and personal expenses from the same receipt, which can be overwhelming and make you more likely to put off your bookkeeping tasks. Connect your business accounts to your accounting software to streamline your processes even further.
4. Regularly Review All Expenses
No matter how busy you get, make time on your schedule to go over your business expense reports. The clearer your financial picture, the better you will understand your financial health and predict any impending cash flow issues. Periodically reviewing expenses will enable you to make more informed decisions and avoid potential pitfalls.
Experienced Small Business Accountants
At Clear View Business Solutions, we understand the unique financial needs of sole proprietors, freelancers and businesses with fewer than 10 employees. Trust our Tucson-based team to provide customized accounting and expense tracking solutions and advice. Our services include tax filing, account reconciliation and QuickBooks setup. For the best in small business bookkeeping, contact us today.