Your small business is expanding, so your income and expenses are also increasing. Keeping track of your expenses is so important in every industry. Today we’re going to look at some solutions for ways to track expenses for a small business.
The Basics
We’ll start by discussing business expenses, what they are, and some typical expenses.
A business expense is any expenditure related to your business. These can be business deductions, essential business expenses are subtracted from your income. Bookkeeping comes in to track your expenses. Keeping track of your expenses is imperative.
Below is a list of ordinary business expenses. Of course, this can vary widely depending on what kind of business you’re in.
- Equipment
- Work vehicle
- Office Rent
- Mileage
- Postage and delivery fees
- Office Supplies
- Accounting fees
- Labor or subcontracted work
- Meals/ Travel/ Entertainment
- Software
- Insurance
- Permits and Fees
- Utilities
- Advertising and Marketing fees
How To Track Expenses for a Small Business One Step at a Time
Open a Business Account
If you haven’t already, open an account at a bank exclusive to your business. No personal expenses are to come out of this account. You will also want to have a credit card dedicated to business. Having these accounts will make it easier to keep track of your company’s financial picture.
Choose the Right Accounting Software
Gone are handwritten ledgers, notebooks, and scribbled-on receipts floating about. The most up-to-date businesses now use integrated software systems that connect your spending and income.
Quickbooks is a great accounting software that can help you track expenses, manage finances, and generate reports. Whether mobile or desktop, it’s a convenient app for small business owners who want to stay organized and keep track of their financial well-being. You can also integrate and connect it with other essential things like your financial institutions or administrative apps like ServiceWorks.
Programs like ServiceWorks integrate easily with accounting software like Quickbooks for a nearly effortless accounting experience without the cost of hiring someone to do it for you. It’s a comprehensive solution with a user-friendly interface that streamlines managing and tracking service requests. All the conveniences you love about ServiceWorks, be it client information, invoicing, or future service dates, can all be connected to apps like Quickbooks. In addition, ServiceWorks offers route optimization and can be programmed to send out customer satisfaction surveys to keep those clients happy and coming back for more. Save time and effort by eliminating the need for attention at every stage of the service cycle with ServiceWorks’ ability to automate the process of service requests from ticket to closure. How neat!
Best of all, ServiceWorks offers a risk-free 14-day trial, so check it out and see how easy your life can be with a little extra help.
Decide On Cash or Accrual Accounting
When setting up your accounting method, you must choose cash or accrual accounting.
Most sole proprietors, freelancers, and other small businesses use cash accounting as it’s straightforward. When you use cash accounting, you record transactions when they happen. For example, you register income when it’s received and record payments when made.
Accrual accounting is more detailed and necessary for businesses with employees or larger enterprises. With accrual accounting, income gets recorded when a product or service sells, not when you receive payment for that product. The same is true with expenses, which are recorded when you receive the bill, not when you pay the bill.
Connect It All
Connect your bank, credit cards, and other business management software, like ServiceWorks, with your accounting software to make it as seamless and effortless as possible to track expenses for a small business. That way, it becomes almost automatic. Almost.
Keep Those Receipts
Using your mobile app in your accounting software lets you track business expenses, receipts, and more. A well-rounded app like Quickbooks has an expense management application that can quickly help track receipts by taking a picture and uploading it into your app. This receipt then gets stored and attached to the appropriate expense at the right time.
If this doesn’t work for you, you can save receipts, make notes by hand on these, and file them away for the future. The IRS says to hold onto business receipts for three years.
Keep An Eye on Your Bottom Line
The relative ease of use of these apps, like Quickbooks and ServiceWorks, makes it easier to know your bottom line financially when you track expenses for a small business. Just remember to be diligent, record expenses promptly, and take a look at your financials often. With all your newfound knowledge, you’ll have a handle on your business finances in no time.
