A business expense tracker is critical for small business owners.
From helping you prepare for tax season to help you maintain a profitable business, there are many important reasons that make tracking business expenses a critical aspect of small business management.
Fortunately, learning how to track business expenses doesn’t have to be difficult. By following a few simple tips, you can start accurately tracking your business expenses today.
Let’s start by answering some common questions you may have about business expenses. Then, we’ll look at why you need to track your business expenses and what tips and mobile apps you can use to do it effectively.
If you want to learn how to track small business income and expenses, this article is exactly what you were looking for!
Why You Need to Manage Business Expenses
There are several advantages to learning how to track your business expenses accurately, ranging from tracking tax deductions, helping you manage business expenses, and understanding your finances.
Manage Your Business Finances
As a small business owner, it’s imperative to know how your business is spending each and every dollar. Small business expense tracking can help you create a more accurate small business budget, perform a breakeven analysis, and much more.
Tracking your expenses will help you effectively manage your small business finances and plan for the future.
Ultimately, the goal of running a small business is typically to become profitable, meaning to make more money than it takes to pay for all business-related expenses.
Part of maintaining profitability is minimizing your business expenses. By tracking your expenses, you can identify ways to cut spending and increase your small business profits.
Like it or not, everyone has to pay taxes. But, unfortunately, one of the mistakes many business owners make is not maximizing their tax deductions.
Several business-related expenses can turn into tax savings, for example:
💲 Office supplies
💸 Business lunches/dinners
💵 Office rent
🤑 Phone data
By keeping a detailed list of your business expenses, you’ll be able to maximize your deductions during tax season.
These reasons, among others, are why you need business expense trackers.
How to Track Business Expenses: 5 Tips
If you need help learning how to track business expenses, follow these five simple tips to get your company’s finances back on track.
1. Open a Separate Business Bank Account
To accurately track your expenses, you should make sure to open a separate bank account for your small business.
Many business owners make the mistake of using their personal accounts as their business accounts. However, this makes it difficult to keep track of the money flowing in and out of your business.
2. Collect Receipts
As mentioned, one of the biggest benefits of small business expense tracking is being able to maximize your tax deductions at the end of the year.
When you make deductions, you may be required to provide proof of the expenses. The easiest way to do this is by providing a receipt. As such, you should be sure to collect and store all of your receipts in case you need to provide proof of expenses on your business taxes.
3. Track Transactions at Time of Sale
Keeping track of business expenses can be difficult, especially when you don’t record expenses on time.
To prevent expenses from piling up and becoming unorganized, be sure to record transactions when the transactions occur. This will help ensure that your accounting records are up to date and that you have a clear picture of your business’s financial status.
4. Use Accounting Software
Fortunately, small business owners don’t have to rely on old-school methods for tracking expenses, like spreadsheets or ledgers.
Instead, many great financial apps and online services help businesses keep track of their expenses. For example, services like QuickBooks will help you track and categorize expenses in addition to helping you track your income, pay your taxes, and more.
Using budgeting software can be a great idea too.
5. Use Business Credit Cards
Corporate credit cards offer many benefits. They offer easy access to financing for daily business operations, generate rewards, and can help you build your business credit.
Additionally, business credit cards will help you track your expenses by recording them in real-time and keeping them separate from your business income.
By utilizing these tips, you can easily learn how to keep track of expenses today.
Business Expense Tracker: Top 5 Small Business Expense Tracking Apps
If you want a business expense tracker, several apps can help you, but it can be hard to determine which ones are worth your time.
Using an app might be the best way to keep track of business expenses.
What is the best business expense tracker app? Unfortunately, there’s really no right answer to that question. It depends on exactly what you need and what app what the right tools to help you achieve your goals.
Here are a few of the best business expense tracker apps for your iPhone or Android device:
QuickBooks is one of the most popular payroll management apps available; it’s also great if you want to track spending. This handy app will help you track, categorize, and manage business expenses. It can also help with record income, track deductions, track miles, generate invoices, and much more.
QuickBooks for small businesses starts at just $12 per month and is available for both iOS and Android.
Expensify is a very easy-to-use business expense tracker for business owners and sole proprietors. It’s great for organizing receipts. Simply take a picture to upload receipts and record the expenses. You’ll be able to organize it by merchant, date, and amount.
Expensify starts at $5 per month per active user and is available for both iOS and Android.
BizXpenseTracker is a business expense tracker app designed specifically for small businesses. This app allows you to track expenses, mileage, and time worked. In addition, it lets users generate expense reports. There are also business expense tracker templates to help you keep track of the information required by your accountant.
BizXpenseTracker costs $6.99 and is only available on iOS.
4. Smart Receipts
Smart Receipts is one of the tops small business expense tracking apps. It’s easy-to-use and reliable and works great to scan receipts. In addition to tracking receipt data, Smart Receipts allows users to generate customizable PDF and CSV custom reports, which you can share with your accountant.
Smart Receipts offers a free version or a paid version for $9.99 per year and is available on both iOS and Android.
Certify offers a user-friendly interface, allowing you to use it as a business expense tracker, generate reports, track invoices, and more. The app also has a travel booking tool, making it easy to book travel and record travel expenses.
Certify costs $8 per user per month and is available on both iOS and Android.
If you haven’t used any of these expense tracking apps, then you’re in for a great surprise! They will help you strengthen your finances as soon as you start using them!
Small Business Expense Tracking Just Became Easier
Learning how to use a business expense tracker isn’t as difficult as you might’ve thought. By following these tips and using one of these useful apps, you can accurately start small business expense tracking.
Interested in finding more helpful small business information and resources?Smart Budgeting Tips for Small Businesses
At Camino Financial, we operate on the motto, “No Business Left Behind.” That’s why we offer small business loans with friendly terms, small business tips, and other resources to help small business owners like yourself get ahead.
Frequently Asked Questions on How to Track Small Business Income and Expenses
What are business expenses?
Business expenses are all costs incurred in the ordinary course of a business, regardless of its size and type. Therefore, business expenses are reflected in the income statement. Therefore, when you subtract business expenses from revenue, you’ll arrive at your business’s taxable net income.
What are examples of business expenses?
What are qualified as business expenses?
Qualified business expenses are those items that you can deduct from your taxable income to reduce what you pay on taxes. That’s why most business expenses are referred to as deductions. However, keep in mind that businesses have limitations and special considerations for what they can or can not report as deductions. That’s why you must know how to track business expenses. By developing an optimal expense tracking system, you’ll be able to pay fewer taxes.
What’s the best way to keep track of business expenses?
Using a business expense tracker, like an app, because you can take it anywhere and update the information anytime.
A business expense tracker on excel can also be a great idea.
How to track business expenses for taxes?
To track your business expenses to successfully file your taxes, we recommend you to follow all the tips above:
What business expenses are deductible in 2021?
When learning how to track small business income and expenses, you need to understand tax deductions.
Rent and utilities, supplies, commercial vehicle expenses, employees’ salaries, contract labor, and depreciation are among the list of business deductions for the tax year 2020- 2021.
For more items, check this list of common tax deductions for business owners.
Why should I track my expenses?
It can help you make sure you have a healthy cash flow because you’ll know exactly how much money you’re spending. This allows you to stay on budget and not make purchases that can hurt your business finances.
It can also help you understand, in hindsight, why you have too much debt or in what areas you should cut your expenses. Fortunately, learning how to keep track of expenses is not really hard.