If you’re not carefully tracking business expenses, you’re putting your profits in jeopardy.
Keeping your finger on the cashflow pulse is essential to ensure your business isn’t losing money. You should know what you’re spending money on and how much you’re spending at all times.
But perhaps most importantly, knowing every business expense can help you rest easy during tax time to ensure you don’t pay more than you need to.
Use this guide to simplify your business expense tracking and make every dollar count.
Open a Business Bank Account
Keep your business and personal expenses separate by using a business bank account for business purchases. This way, you have a detailed statement of where your money goes in case you lose a receipt or forget to log a purchase.
To open a business bank account, you’ll first need to register your business. It also pays to shop around and compare fees and benefits to get the best deal.
Categorize Your Expenses
Most small business accounting software allows you to categorize expenses, such as food, travel, and supplies.
This is especially helpful if you want to track how much you spend on a certain type of item. You can assign a category to every expense and generate reports to see where your money is going.
Automate Your Tracking
Bookkeeping software has largely replaced the tedious process of balancing your books by hand. In many cases, you can create repetitive workflows and functions to make expense tracking quick and painless.
Automation is also highly recommended for payroll. Services like a check stub maker allow you to customize your check stubs and invoices while also streamlining the process.
The more you can automate your expense tracking, the less time you spend doing it yourself.
Check Your Books Often
Even if you automate or outsource your bookkeeping, you should keep a constant eye on your financial status.
Make it a point to check your books on a weekly basis to ensure nothing has fallen through the cracks. It’s easy to forget logging a receipt if you don’t have a solid process in place to do so regularly.
You should also consider giving your books a more in-depth review on a monthly or quarterly basis. This can help you identify trends and gauge your business’s growth or decline.
Enlist the Help of a Professional
Bookkeeping can easily be a full-time job for any business, regardless of size. If you find yourself falling behind or feel you lack the expertise to manage your books, it’s a good idea to enlist professional support.
Many freelancers or tax agencies are skilled in tracking business expenses and can ensure your books remain balanced at all times. This can save you hours each week and month.
In some cases, it may be more cost-effective than doing it yourself.
Don’t Put Off Tracking Business Expenses
Tracking business expenses is one area that should never fall by the wayside. Your profitability depends on it. When you follow the above five tips, you stand a much better chance of enjoying financial success.
For more business tips and insights, explore our business resources.