Three Basic Steps to Keeping Your Expenses Organized and Easy to Track
From ever-changing inventory costs to managing the corporate credit accounts, tracking business expenses can be a tedious and time-consuming affair. As a business owner, expense tracking remains one of your most important business tasks because losing your handle on the company’s expenses can lead it on a path to financial ruin.
In truth, tracking your business’s expenses doesn’t have to be so frustrating and it doesn’t have to take up the majority of your day. Successful (and easy) expense monitoring starts with the following three basic steps.
#1 – Create a Detailed Business Plan
What does a business plan have to do with monitoring your expenses? Not much in the grand scheme of things, but it does help you keep your business more organized because it lists your goals and identifies the things you need to do to reach them. This helps you take stock of your business and its financial needs so you have a good starting point for tracking the expenses needed to get your business where you eventually want it be. Perhaps even more importantly, by creating and regularly reviewing your business plan, you will be in a better position to avoid unnecessary spending on items that aren’t conducive to your business goals.
#2 – Start a Business-Only Checking Account & Obtain a Business Credit Card
One of the easiest ways to track business expenses is to use one account to pay for everything. If you don’t already have one, start a business checking account at your bank. Once you have your account set up, research business credit cards and apply for the one that best fits your business needs. Only use your business credit card for business purchases and pay off the balance every month using your business checking account. This will not only make it simple and easy to track your business-related expenses, but any interest you pay on your credit card account will be tax deductible and you will be improving your business credit at the same time. Of course, never use your business checking account or credit card for personal purchases as this will only complicate your expense tracking.
#3 – Keep and Organize All Business-Related Receipts
Keep all receipts for all of your business-related purchases. From simple office supply runs for printer ink to new computer purchases, keep all of your receipts stored in a safe container and keep them organized. If you work from home, then keep any home improvement receipts for repairs that affect the business, such as having your HVAC unit replaced as these can be partly deducted as a business expense on your taxes. Keep a notebook in your vehicle to record all mileage driven for business purposes, even if it is to the bank and back. Keeping all of your receipts and expense information organized and on-hand will help make tracking business expenses much easier and protect your business should the IRS come calling.