Expense Tracking Tips for Small Businesses

One of the keys to the success of any startup or small business is accurate record keeping. If you do not know where your money is going, it will be very difficult to keep the books in balance and ensure profitability. In addition, you must make sure that you are receiving all the deductions you are entitled. For example, small business owners are allowed to deduct expenses such as a portion of meals, cell phone usage, mileage, hotels, entertainment costs, and many others. Nevertheless, there must be a system in place to ensure accuracy; otherwise, there could be trouble if Uncle Sam ever comes around for an audit.

Expense Tracking

Here are three tips for small businesses to track expenses and stay better organized:

Keep Business Expenditures Separate: It is easy for a small businessperson to mix personal and business expenses together. For example, you go to the office supply store to buy some paper and an ink cartridge for your printer. Then you come across a software program you think your daughter might like. It is tempting to purchase everything together under one receipt. However, it is better to purchase these items separately so you will know exactly which items are business-related.

Use a Small Business Credit Card: In order to keep your expenses organized, it is a good idea to have one separate credit card that you can put all your business purchases on. This helps solve the issue of mixing business and personal expenses. In addition, there are several banks that offer specialized small business cards with advanced expense tracking and often reward points to redeem towards travel, hotels, and other related services. One word of caution on credit cards; always pay the bills at the end of the month to avoid interest charges. To ensure that this happens, record the expense immediately in your business checking account. With the amount debited from your balance sheet immediately, you will not even know it is gone when it comes time to pay the bill.

Automate your Expenses: There are many software products available on the market to help small businesses keep their expenses organized and automated. It is best to choose one that can easily integrate with other common software, as well as your bank accounts and credit card. QuickBooks is one of the best on the market but there is a bit of a learning curve. When getting set up, you may want to consider hiring an expert that can train you on the software so you will be ready to go on day one.

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