Ease Your Business Expense Tracking
Business tracking is an essential step in maintaining a business. Whether a business is small or medium, we need to track the expenses to manage them and avoid any shocks later. But it is not as smooth as it may seem because it involves massive effort to keep records and organize receipts. The business owner usually realizes the importance of tracking expenses in the tax season.
Let us talk about business expenses. Business expenses are those expenditures that you spend on starting and maintaining your business. They include spendings like inventory purchases, for example.
Wages and salaries are also a part of expenses. Sometimes you can confuse your outgoings with your business expenses, so it is crucial to keep your business expense and personal expense separate. Let us give you some great advice on how you can track your business expenses.
- Set-up a business bank account
An easy and fruitful way to keep personal and business accounts separate is to open a business bank account. Your business income should be effortless to monitor and differentiate from other income sources, especially if you have other side businesses running.
Setting up a business bank account can save you countless hours of adding or subtracting your expenses and tiresome sorting of receipts. Business accounts do this marvellous job of keeping track of your costs; they have the specific feature of sorting expenditures into unique spending categories.
- There are a few things you should have to open a business account:
- The name of your business, also known as DBA
- You must have a license of your business to open a bank account
- EIN and SSN ( employer identification number and social security number, respectively)
- Your Articles of organization
- Your Articles of incorporation
- Be confident to research the various rewards, rules, and fees surrounding business bank accounts before taking a final decision.
- Automate your mileage tracking
The vehicles and automobiles help transfer equipment, staff, and necessary elements from one place to another. Every business needs them for the proper functioning of the company. Since vehicles need fuel to run, estimation of used fuel is a significant task requiring precision and less time consumption.
Thus, software such as the Mileage tracker makes the work easy and swift. It provides an accurate count of the miles a vehicle covers. So, you can draw an exact estimate or ratio of your fuel expenses.
- Save receipts carefully
A receipt serves as proof to claim payments. There are numerous advantages to keeping a payment receipt safe.
- For warranty purposes:
Warranties can serve a huge purpose. When you purchase oversized items, such as appliances, jewellery, or electronics, you receive a warranty card. This warranty card assists you in the long run because you can claim any damage or repair with it. Keep this warranty card save in a file. Label the file so that you can quickly locate your documents.
- Receipts are proof of major expenses
If you own a car for exclusively business purposes, make sure to keep its receipt in the car documents. You may need it in any instance. Besides, ensure that your car is insured and keep those documents secure.
- For return and exchange policy
Receipts are necessary to show if you want to claim any return or exchange. So, keeping them secure assures you the benefit of exchanging and returning during a given time limit.
- Claim reimbursement of expenses
It is crucial to present a receipt of your purchase if you want to reimburse your expenditure. Sometimes people make a payment from their credit cards and enjoy a reimbursement. To claim your money, you should keep a receipt. Otherwise, you can be in trouble.
- Make a spreadsheet
This option works best if you prefer a low-tech approach to track your expenses or start a new business. Making a spreadsheet provides a nicely briefed expense summary or history. You can categorize your payments according to several groups to suit your needs and requirements.
Spreadsheets are convenient to import into your accounting software to note down expenses.
Make a spreadsheet in Excel or Google with the following columns:
- Make payments through business credit card or corporate credit card
When we try to manage finances, we should try to specify everything for a defined purpose. Keep a dedicated business credit card or corporate credit card to track expenses comfortably. Keep several credit cards under one account and issue them to other staff members so that they can also make a transaction if needed.
Another benefit of using a business credit card is that you’ll build business credit, which is a crucial advantage for founders in need of financing.
- Digitize all your receipts
It may be fascinating to sort receipts at the taxation time, but it is not a preferable experience. Usually, people get tired of looking for old tickets, and there is a huge mess. So the adventure turns into a nightmare!
But if you develop the habit of taking a photo of a receipt or scanning it for keeping valid proof, it will save you both time and effort. Besides, a clean digital copy attracts others more and has a high chance of authentic validation. Thus, by showing a digitized record at the time of tax return, it is easier to comprehend and has high acceptance chances.
- Review your expenses regularly
There are several benefits of reviewing your budget expense sheet regularly.
After you set up a budget, tracking expenses daily is essential to keeping you on that budget. If you don’t review it daily, you will lose control over your costs.
At the end of each month, draw a comparison between savings and your expenses to monitor your budget. If you overspent, devise a strategy to control your costs. Similarly, if you spent too little, use your savings to pay off debt. If you are confused about managing your spendings, reviewing is a great way to help you!
As it pinpoints the high expenditure zones, you will be careful about those zones the next time you will spend. Another advantage of assessing your expense sheet is to get rid of unnecessary expenditures.
For proper management and organization of a business, it is mandatory to track expenses. A well-organized spreadsheet or a bank statement can provide you with immense peace of mind. There is no need to stress over searching lost receipts and spending endless hours finding them. Follow these above-given steps to make noting expenses a stress-free experience.
Mustafa Al Mahmud is the Founder and CEO of Gizmo Concept and also a professional Blogger, SEO Professional as well as Entrepreneur. He loves to travel and enjoy his free moment with family members and friends.