Efficient expense tracking allows you to monitor where most of your money goes and how much you are spending, making you financially aware. Below are some of the useful tips that can help you track your business expenditure and financial resources more efficiently.
1. Make a spreadsheet
A spreadsheet is a traditional tool that helps one keep track of important information such as tax deductions, capital allowances for your firm, legal fees, and marketing prices. However, it is prone to error and crashing.
Grenville Croll, a spreadsheet risk expert, says that “Spreadsheets have been shown to be fallible, yet they underpin the operation of the financial system. If the uncontrolled use of spreadsheets continues to occur in highly leveraged markets and companies, it is only a matter of time before another ‘Black Swan’ event occurs, causing catastrophic loss.”
Accounting software can be a great alternative. But if you still wish to have a manual record of your business finances, here are the following categories to consider:
- Travel expense
- Mortgage
- Utilities
- Meals
- Marketing
- Office supplies
Then, simply add columns for each of them.
2. Open a business account
Are you a freelancer or an entrepreneur? Opening a business account is recommended. Without one, you may find it challenging to manage your personal and business finances. Let alone when tax time comes. A business financial account allows you to manage them separately. You may need the following:
- Business savings account
- Business credit card
- Business bank account
When it comes to business transactions, a business credit card is preferable. Cash can be hard to track, and you always need receipts to back up your payments, unlike digital transactions. Forbes provides a list of some of the best business credit cards to use. The rewards and points you earn for using a credit card can be beneficial; you can get discounts on flight booking or hotel accommodation.
3. Keep all of your receipts
-
Hard copies
Receipts serve as proof of your financial transactions, which are necessary for documentation and tax purposes.
Keep them in a separate envelope, so you can easily retrieve them when needed. Compiling and labeling them in different folders are also a good idea; it allows you to pull one based on the category. You can also keep them in a binder and label each by month. This way, putting together all of your proof of payment when tax time comes won’t be a problem.
-
Digital receipts
Not all transactions can be made over the counter. There are online payments, which may include transportation, hotel accommodation, and mobile phone stipend. You can take a screenshot and save them in a separate folder, though.
4. Cloud accounting software
How is cloud accounting software superior to spreadsheets in many ways? First off, they are reliant on the Internet, making them accessible to business owners regardless of time and location. This allows them to track business expenses at their convenience. Second, adding business expenses on the go is also made possible.
Cloud accounting software uses a central server, which means that data is stored and backed up in real-time, minimizing the risk of data loss. Businesses of all sizes can benefit from this.
5. Link your bank account to your accounting software
Linking the credit card you frequently use to shop for your business expenses to your accounting software allows you to categorize or label them easily. After each transaction, they automatically appear or are imported to your accounting tool. Indeed, it is more efficient than a manual audit, which is a lot of hard work. Bookkeeping is still an option, but it can sometimes be inaccurate.
6. Check your business expenses on time
As a business owner, make it a habit to check your business expenses regularly. Organize your receipts and expenditure on a daily or weekly basis. It is up to you, though. Choose the strategy you find more convenient. As we already all know, collecting and adding financial information are time-consuming, making them daunting. But as long as you organize them, you can avoid financial discrepancies.
7. Use expense tracker application
Expense tracker applications allow you to keep track of and manage your expenses efficiently. Through them, you become more aware of your debts, earning, revenue, and financial goals. They contain unique features that are customizable based on your needs. They are free and easy to use. Download the one that is most suitable for your business.
Financial management is essential in business as expenses can quickly add up. But by doing the aforementioned tips, tracking your spending habits becomes a lot easier.