Expenses to get a clear, accurate picture of your business’s profits and losses, you need to set up a system to track your business expenses. Not only will this help you make wise financial decisions and projections, but it’s invaluable organization during tax time.
Whether you’re just starting out or you want to update your current system, there are plenty of useful tools to keep track of how you’re spending your cash.
Here are our best tips for tracking your business expenses:
- Open a business banking account: Keeping your business and personal finances separate is crucial. When you start a business, open up a business bank account. It’s the professional thing to do—but it will also save you a lot of time and hassle when you’re reconciling your accounts. You’re much less likely to miss expenses when your money is kept separate.
- Create a system: Next, decide how you’re going to track expenses. Creating a system can be as easy as deciding to log each expense as it occurs, or reviewing and inputting weekly expenses every Friday afternoon. The best type of system will vary, depending on the individual business. For instance, if you have administrative staff, you and your employees may submit expenses to an admin, so they can log the business expenditures in your accounting software. If you’re a sole proprietor, you might log expenses in an app or accounting software every week. The key is to be consistent and make sure that your team knows the procedure.
- Find an expense tracking app: Take advantage of technology by finding an expense tracking app. There are dozens of expense trackers that can work for sole proprietors and small businesses. Some are free to use, while others require nominal monthly subscription payments. Most can integrate with your accounting software, bank accounts, and more. Some will even scan, store and record your receipts—you’ll never have to dig through a messy shoebox of papers again.
- Regularly review and categorize expenses: No matter how you choose to record your expenses, it’s important to review and categorize expenses on a regular basis. At least once a month, review your expenses and analyze where your money is going. This helps business owners keep an eye on their day-to-day financial health, and sets them up to make better long-term business decisions.
- Find the right bookkeeping service: A great bookkeeping service can make expense tracking even easier. Outsourcing your financial organization and reports can take a significant amount of work off your plate. Your bookkeeper can advise you on how best to track expenses on your end, to ensure seamless integration with their own records.
The better your records, the easier it will be to keep your company running smoothly. Expense tracking is just one facet of good business bookkeeping. Take the time to create a system and invest in the right tools or bookkeeping services: it will pay dividends later.
When you need trustworthy bookkeepers, MCG Solutions can help. Reach out today to get started.