How often are you tracking your business expenses? Every day? Every week? Once a month? Only when tax time rolls around?
It might not be the most exciting part about running a business, but it is one of the most essential and important parts. Spending hours flipping through credit card statements and paper receipts is a pain, and there’s always a good chance you’ll miss a charge, or a receipt will get lost in the shuffle. Plus, think of all that valuable time you lose that you could be spending on increasing revenue for your business.
But you need to know how much money is going into the running of your business. Luckily, there are several simple steps you can take to make tracking your business expenses more manageable.
Get a business banking account with a business credit card
If you’re the only employee in your business, it might not seem so obvious that you need a separate account for your business finances. Go and set up a business banking account and put all of your business income in that account. Many business banking accounts come with a business credit or debit card that will help you keep track of your business expenses. You have to be diligent to ensure that you only use your business cards for business expenses, but once you get the hang of it, it will help you draw a clear line between your personal and business expenses.
Plus, having a business banking account will help you build your business’s credit in case you need financing for expansion or equipment in the future.
Invest in accounting and expense tracking software (especially one with an app)
There are a lot of excellent expense tracking software options out there, so take some time to find one that works for your business and is user-friendly. The best ones also have an app that you can easily download on your phone or tablet. Being able to take a quick picture of your itemized receipts as soon as they’re handed to you, and segment them by the type of expense, will help save you (and your accountant) a lot of time and headaches.
Plus, if you ever get audited, having the digital copies of your receipts will help you prove your expenses throughout the year.
Hire a bookkeeper
Even the smallest businesses need help managing their books, so investing in a bookkeeper can make your business life a whole lot easier. You don’t necessarily need to hire a full-time accountant to keep on top of your company’s finances — unless your company is larger or expanding at such a rate that an accountant make sense — so consider looking into a freelance bookkeeper who can spend a few hours a week or a month balancing your books, receipts, and invoices.
And if you’d like to avoid getting audited, a bookkeeper can help you do that. Keeping your books on the straight and narrow will keep you off the IRS’s radar. And they can help you identify which expenses are tax-deductible.
Get in the habit of tracking your expenses daily
Set aside half an hour at the end of each day to go through your expenses for the day. Mark the time on your calendar and make sure you stick to it. The sooner you get used to tracking your expenses regularly, the better you’ll understand just how much money is going out versus what is coming in. And when you understand your finances, you can better manage your business. Soon, tracking your expenses will become second nature, and you’ll have one of the best-run businesses in town.