Learning how to track business expenses is a very important step to take as a small business owner.
From helping you prepare for tax season to help you maintain a profitable business, there are a number of 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 take a look at why you need to track your business expenses and what tips and apps you can use to do it effectively.
Why You Need to Track Your Business Expenses
There are a number of advantages to learning how to track your business expenses accurately, ranging from helping you manage your finances to tracking tax deductions.
Manage Your Business Finances
As a small business owner, it’s very important to know how your business is spending each and every dollar. Tracking business expenses 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. One of the mistakes many small business owners make is not maximizing their tax deductions.
There are a number of business-related expenses that can be deducted from your taxes, 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, make tracking your business expenses incredibly important.
5 Tips to Track Your Business Expenses
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
In order 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 tracking your business expenses 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 in a timely manner.
In order to prevent expenses from piling up and becoming unorganized, be sure to record transactions at the time that the transactions take place. This will help ensure that your accounting records are up to date and that you have a clear picture of your business’ 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, there are a number of great apps and online services to help businesses keep track of their expenses. Services like QuickBooks will help you track and categorize expenses in addition to helping you track your income, pay your taxes, and more.
5. Use Business Credit Cards
Business credit cards offer a number of 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 keep track of your expenses by recording them in real-time and keeping them separate from your business income.
By utilizing these tips, you can easily get started on tracking your business expenses today.
Best Apps to Help Track Business Expenses
When learning how to track business expenses, there are several apps available that can help you, but it can be hard to determine which ones are worth your time.
Here are a few of the best apps for tracking business expenses:
QuickBooks is one of the most popular payroll management apps available. This handy app will help you track and categorize business expenses, 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 expense tracker for small business owners and sole proprietors. Simply take a picture of a receipt to record the expenses and 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 an expense-tracking app designed specifically for small businesses. This app allows you to track expenses, mileage, time worked, and lets users generate expense reports. There are also templates to help you keep track of the information required by your accountant.
BizXpenseTracker costs $6.99 and is only available on iOS.
Smart Receipts is an easy-to-use and reliable receipt scanner. In addition to tracking receipt data, Smart Receipts allows users to generate customizable PDF and CSV 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 very user-friendly interface, allowing you to easily track expenses, 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.
Now you know how to track business expenses
Learning how to track business expenses isn’t as difficult as you might’ve thought. By following these tips and using one of these useful apps, you can start accurately tracking your business expenses today.
Interested in finding more helpful small business information and resources?
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.