5 Steps by Steps to Start Tracking Your Business Expense
Running a business is like navigating through a maze of numbers, and tracking expenses are your compass. It provides clarity, revealing the financial health of your enterprise.
But guess what? Once you've got a slick setup for tracking business expenses, it's like turning on the lights in a dark room. Now, you realize that keeping track of expenses isn't just a task—it's like the silent hero in your accounting plan, setting the stage for your small business victories. Follow the steps below to actually track your business expenses properly.
Step 1: Create a Business Account
Setting up a special account just for your business adds a personal touch to managing your finances. It brings all your business expenses under one roof, making it a breeze to grab those tax deductions.
You can start creating 3 types of Accounts
- Business Checking Account - A business checking account is the heartbeat of your financial operations. It facilitates day-to-day transactions, providing a clear snapshot of your cash flow.
- Business Savings Account- This will act as your emergency fund. This is where you can keep it as future investments, creating a financial buffer for unexpected challenges.
- Merchant Services Account - This one is essential whereyou need to keep up with the modern transactions so it enables your business to accept card payment and streamlining customer transactions easily.
Getting a separate card for your business expenses is a game-changer. No more wrestling with receipts! Plus, having a dedicated business credit or debit card puts your credit history neatly in order and at your fingertips. This not only makes snagging business financing easier but also unlocks cool perks like cash back on purchases and sweet deals on flights and hotels.
Step 2: Choose Advanced Accounting Software
The next thing to do to keep track of business expenses is to choose an accounting software that can automate your business records and track each expense. With accounting software, monitoring and organizing your business expenses become easy. The best accounting software comes with reporting tools that provide year-to-year comparisons of your business expenses.
Features to Look for in Accounting Software
Reporting Tools
Robust reporting tools transform data into actionable insights. A bird's-eye view of your business expenditures ensures strategic decision-making.
Year-to-Year Comparisons
The ability to compare financial data across different years unveils trends, offering valuable insights into your business's financial evolution.
Cash vs. Accrual Accounting
Choose your preferred accounting method wisely. Cash accounting records transactions upon payment receipt, while accrual accounting logs every bill and payment, providing a comprehensive financial overview.
Here are some options you can try to track your business expenses for FREE. You can just use this apps which they offer features that includes receipt storage, custome reporting and multicurrency support to help you track your expenses properly and show your financial status.
Or other options, you can also track your expenses using our FREE template spreadsheet. Not just its cost-free nature, but also a user-friendly simplicity. It's like having a friendly assistant that helps you track your spending without any extra costs or complications. So, if you're all about a straightforward and budget-friendly way to stay on top of your finances, this might be your perfect companion.
Step 3: Integrate Your Financial Institutions
To make keeping tabs on your business expenses a breeze, connect your accounting software directly to your banks. This nifty feature not only automates the download of all your bank transactions but also neatly organizes your expenses into categories. Imagine it as your personal assistant streamlining your financial tasks.
But that's not all – this integration goes beyond the basics. You can effortlessly bring in your daily transactions and snag those bank statements with just a click. It's like having a magic wand for reconciling statements.
What's even more delightful is that once your bank accounts join forces with your accounting system, you can handle banking transactions right within your software. No more logging into your bank account separately. This seamless sync not only trims down the time you spend on expense tracking but also guarantees an accurate record of your income and expenses. Rest easy, knowing no transaction slips through the cracks.
Step 4: Store your Receipts
For precise monitoring of your business expenses, make it a habit to file your receipts as you navigate through your daily operations. The IRS mandates the retention of paper receipts and other documents, like bank statements, for a minimum of three years. To stay organized, utilize folders to neatly store paper receipts, adding details about the purpose of each purchase. You can go a step further by labeling and arranging folders based on dates or specific categories.
Embracing modern convenience, tracking business expenses has evolved with the introduction of accounting software mobile apps and business expense tracker apps, seamlessly integrated into your accounting software. These digital-savvy apps serve as a virtual repository for your receipts. Imagine snapping a quick photo of your receipts with your phone camera and effortlessly storing them in the cloud. What's more, these receipts synchronize seamlessly with your account books, providing a hassle-free way to monitor every transaction.
Remember, it's not just about tracking the big expenses – capture them all, from your mileage and flight costs to those essential meals. Keep those receipts; they're your ticket to a comprehensive financial record.
Step 5: Regular Review of Business Expenses
Consider expense tracking as a dynamic process, not a static routine. Regular reviews are the compass checks, ensuring your financial ship stays on course.
Dive into the reports – inspect the numbers and delve into analysis. Identify trends, observing where your money flows and how expenses build up in specific areas. Don't forget to address any errors or omissions along the way.
By consistently reviewing your business, you unveil a clearer picture of its financial standing. This insightful process not only keeps you informed but also empowers you to make well-informed decisions crucial for the growth of your business.
In the end, tracking business expenses aren't just number-crunching, but it is the heartbeat of your small business. These steps aren't tasks, but they're personalized milestones shaping your unique journey. Cheers to nurturing your business's rhythm, one expense at a time!
