There are various ways to track business expenses but finding an expense tracking system that works for you is crucial. According to studies, many small businesses struggle with money management and monitoring business spend. Keeping track of expenditures and accurately accounting for all expenses in your business helps you manage it effectively and focus on the day-to-day operations that will boost the growth of your business.
Here are some modern tips on how you can track your business expenses easily and effectively.
Open a business bank account and have a dedicated business card
It is essential to open a business bank account that is exclusive to business transactions. It should not be linked to a personal bank account. A separate business bank account allows you to track your expenditure easily and adequately organize your finances. Having prepaid business cards for your company will help you in budgeting and tracking the expenses of different departments that have access to the business cards. No credit checks are required, and they ensure an employee does not run up debt.
Use an expense tracker application or software
These applications are available on most devices like mobile phones and laptops, and they instantly track your expenditure. You will be able to create reports that conform to the financial status of your business and make informed decisions regarding your business. The apps categorize all your business expenses and keep them all in one place, allowing you to manage them conveniently. They are designed to book-keep and categorize expenses. They also make filing your business taxes easier.
Digitalize all business receipts
Utilizing prepaid debit cards and prepaid credit cards is one step to easing the overwhelming task of tracking your business expenses. The next step is scanning or taking a photo of a receipt and exporting it to your accounting software. Anytime you have an expense on your business account, digitally capture and save it for future reference and ease of accounting. Keeping all your receipts will come in handy during audits and when you are filing returns.
Categorize and record all business expenses regularly
It is easier and feasible to record your businesses expenses immediately. It increases the accuracy of the records and helps you avoid omissions that are common when recording expenses later. It is also important to categorize expenses find them easily. Some accounting applications automatically record and categorize expenses for you. Precisely setting up your accounts and regularly reviewing your expenses allows you to ensure they are properly allocated and recorded. Having a decent spend management system is possible if you note all expenses on the go.
Connect your bank account to your accounting software
You will be able to track transactions conveniently and easily. You can monitor the expenditure on prepaid debit cards and prepaid credit cards remotely by checking the spending activity on your accounting software. Employees may utilize the prepaid business cards then you can track their expenditure on your app. There are multi-user expense accounts that integrate your business bank account with your accounting app, allowing you to review and manage these expenses.
Identify tax-deductible expenses
Most businesses aim to save money and spend efficiently. Knowing the tax-deductible business expenses is essential to achieving that goal and helping you effectively manage your finances. Common tax deductions include travel and vehicle expenses, laundry and clothing expenses etc.
Monitoring business spending is a huge deal in determining the success of your business. Even though it is a challenge to some businesses, especially startups and small businesses, you can always create a plan that will help you properly track your expenses.