6 Tips to Help Keep Track of Small Business Expenses
Organizing and accurately keeping track of your expenses is one of the most fundamental things that any small business owner needs to do regularly. When your company’s expenses are managed well, it won’t be so hard to grow your company and boost your profits. Conversely, with botched expense tracking, you won’t have a clue if your company’s cash flow can cover your expenses, leaving you with no other option than to apply for small business loans to secure your funding and keep your doors open for business.
If you’re serious about improving your company’s organizational efforts, you’ll need to get better at keeping track of your business expenses. Below are tips that can help you achieve this goal:
1. Keep your personal and business expenses separate
You should separate personal finances from your business finances. This tends to be a basic best practice for small business expense tracking. In other words, you must have a business-only credit card and a business-only bank account. Personal funds shouldn’t be used for business expenses unless you want to add unnecessary complexity to the mix. Plus, it may also result in your company falling under IRS scrutiny.
2. Save and store your receipts
Remember to save and store your receipts. In case you’re not aware, you’ll need them for calculating your tax-deductible expenses. In the event you’re audited, you’ll need these receipts to show the IRS. Should you choose to keep them in envelopes, remember to write the date and purpose of the expense on the outside to keep everything organized. However, if you want to store them electronically, you can scan the receipts and turn them into PDFs. You can also choose to use your smartphone to take a photo of each receipt.
3. Promptly record all business expenses
Timeliness is extremely important when it comes to documenting expenses. Aside from keeping your finances up-to-date, it also saves you a lot of time and effort later. Unless you want to end up with a mountain of disorganized receipts, it’s best to record each business expense soon after you make a purchase. You’ll thank yourself later for recording transactions at the time of occurrence.
You can sync your smartphone to an online calendar which will enable you to track your expenses as they take place. These online calendars can provide notifications for bills you need to pay before they are due. You can also use them to set up alerts for single or recurring expenses.
4. Invest in accounting software
Although you can always choose to use Excel spreadsheets when you’re testing your market, you can never go wrong with a professional accounting solution. Deciding to invest in accounting software means you won’t have to break a sweat when you handle your expense tracking needs. On the other hand, not investing in the right accounting software can harm your business.
You can find numerous options out there including FreshBooks and QuickBooks. You can also explore niche solutions such as Apptivo and GoDaddy’s Online Bookkeeping. These easy-to-use solutions are SMB CRM systems that have accounting systems built into them.
5. Monitor your performance regularly
Small errors can turn into big ones if you don’t catch them early, especially when your business is growing fast. That’s why it’s extremely important to monitor and analyze performance with the help of accounting software. You can use this tool to produce weekly and monthly reports that show your company’s profits and expenses. You can also benchmark your company from quarter to quarter and month to month using these reports.
6. Contract a bookkeeper
Do you feel like you can’t seem to get a handle on accurately tracking your business expenses? If so, you’ll need to hire a good bookkeeper to keep you out of trouble with the IRS. He or she can go over your receipts and invoices using your accounting software. Contracting a bookkeeper may seem like an additional expense to you, but it’s worth the investment.
Small business owners shouldn’t use pen and paper or maintain a shoebox of receipts when it comes to handling expense reporting. It doesn’t matter if your company is big or small. You need to manage your finances using essential tools that larger size companies also use. In practicable terms, this means you should start replacing manual systems with mobile apps, automation, and digital filing architecture. These technological advancements will help you keep track of your small business expenses, efficiently and quickly.
Apply for Small Business Loans to Give Your Business a Financial Push
Occasional cash crunches sometimes happen to businesses. Although it helps to keep track of small business expenses, entrepreneurs will eventually need small business loans to keep their cash flow stable. With that, it’s better to explore the different business loan options now. Lenders are more likely to approve business loans when the company’s finances aren’t compromised. Be sure to know what your options are and use it wisely.