Tracking your business costs involves identifying every expense made during a particular period of time. Doing this can seem like a lot of work, but it helps you stick to the business’ budget, avoid unnecessary expenditure, and to prioritize expenses that directly contribute to the growth of your business.
Ideally, you should itemize all your business expenses on a daily basis. But this isn’t always easy.
We have compiled this comprehensive list of smart tips to help you organize your financial records and track your expenses without hassle.
For small business owners, the boundaries between personal and business finances can get blurry. Unfortunately, this could cause you trouble, especially during tax season, when you need to avail your receipts and bank statements to justify any tax returns.
In addition to helping you separate your business and personal purchases, a business account deters you from using cash. Cash purchases come with only a receipt, while bank transactions are recorded in both your bank statement and your receipt.
You might want to sign your business account up for a credit card, as some cards offer great discounts, cashbacks, and redeemable reward points.
If you frequently take business-related trips or have a fleet of company vehicles, it’s a good idea to get a fuel card. They not only help you avoid cash fuel purchases but also have useful fleet management features.
For example, you can set fuel limits for each driver, prevent them from fueling above a set tank size, and monitor their mileage and fuel consumption.
As everything is well documented, you don’t have to question your employees on where, when, and why they stopped for fuel.
Some of these cards can even be integrated into your accounting software, further reducing the amount of work you need to do. There are lots of options available, each offering unique benefits. Consider what will work best for your business.
This cannot be overstated. Tax audits can sometimes ask for receipts in order to substantiate your return claims, and if you don’t have them in hand, you could lose a lot of money to the taxman.
Additionally, make sure to clearly state the purpose of the purchase on the receipt. A receipt from a local restaurant won’t help you much unless you prove you were there for lunch with a certain client.
Here are some useful tips for storing your receipts:
● File them
● Arrange them in chronological order
● Consider scanning them and storing them in the cloud
● Keep a detailed business calendar record as a backup
● Make sure to file supportive documents such as bank statements
Business owners are rapidly shifting away from traditional bookkeeping methods. The desire to access their financial data on the go is driving business owners towards cloud accounting software.
It frees you from the trappings of spreadsheets and other manual bookkeeping methods, massively reducing the risk of errors.
Such software stores your data on a secure remote server, keeping it safe from computer crashes. It also easily integrates with credit cards, bank accounts, and fuel cards. Data is updated daily, and you can even configure the software to take care of your tax records.
Financial tasks can be very uninteresting. They are very involving and yet still have to be taken care of to ensure your business remains in good health. A few smart moves, however, can make it easier to sort out your finances, freeing up more time for other critical business tasks.