Tracking a startup’s business expenses is a vital affair. That’s why knowing how to track business expenses is so important, especially during a small business’ initial stages. Of course, the best approach to business expenses is one that works for entrepreneurs, business owners, and team members alike. We’ve come up with 8 simple tips to track business expenses to ease how you run your business expense reviews.
Hoping this reading clarifies the importance of tracking business expenses simply and usefully, please let us know if you were to have any queries or comments, as usual.
How to track business expenses
Learning how to track business expenses starts by accepting how much goes into digitizing files and receipts.
To begin, scan your invoices, receipts, and/or bills. Then, use an app to order the above into categories. Hopefully, you’ll be able to rely on an app that manages all your SaaS tools in one. If you haven’t, check out Monthly for that. Using it should make the task of tracking your costs and expenses much easier.
If scanning is an issue, help yourself by adding the best scanning app on your phone. And make it a habit to document your expenses. Do so as soon as you get a hold of the printed version of your charges. Trust us, going into expense tracking as smoothly as this will undoubtedly make any possible startup audit a much more easy-going experience.
8 simple tips to track business expenses
1. Work out of a single bank account
To start with our 8 simple tips on how to track business expenses, try to keep all your expenses paid out of a single bank account. This doesn’t mean having a single account for all your business needs. Yet, even if you produce diverse business cards to distribute among your team members, keep all your expenses tracked via a single bank account. Hence, a single statement can ease your job of hunting down all your payments. Forget about chasing covered fees and more across various banks or multiple accounts and reports. Doing this can also be a great way to measure your incidentals.
2. Map out your cash flow
Not adhering to the most effective management of your cash flow is the main reason businesses must shut down. They fail. So, get an excellent grip on this and make sure you map it out. Doing so should ensure you have enough funds in your account at all times to cover all you need, for example. And this, of course, means sparing up on overdraft fees, not going over budget nor facing any such troubles.
3. Stay on top of your deductions
Speaking of fees, we also advise keeping an eye out for tax deductions. The importance of tracking business expenses also has to do with claiming write-offs appropriately. You can get a big cut on tax dues or large refunds if you stay on top of all your write-off opportunities. For that, monitoring your business expenses is vital.
To maximize on above, though, you can also use apps that directly link your account to your financial and accounting software. These can keep records of relevant activity for you. And, again, use a SaaS tool manager like Monthly to keep an eye on performance. The idea is to find a tool that gives you a vision of frequency of use and overall costs, both per single period and on an ongoing basis.
5. Establish specific dates to track expenses
Whether you end up resorting to a tool manager or do this manually on your own, make sure you always check on your expenses with a certain periodicity. Set alarms, if you must, or jot this task down on a reliable calendar. Ask for reports from team members who are tracking your expenses down for you.
All in all, make sure you find just the right tool that will let you stay on top of your financial movement. In this sense, Monthly is also a great suggestion as it literally tracks and optimizes your spend.
Remember, you’ll need to store this data for at least 3 years for tax purposes, so it’s best to be prepared to identify any expenses at any given point if you must. Auditing is real and can happen to a startup or any sort of business anytime.
6. Add info to your records
Remember above when we recommended to scan and store documents at once? That’ll happen on any given day every week if it must. Make sure to store documents properly. Binders or specific files per month and year can help. On that note, a new simple tip to track business expenses is to always jot down the reason and kind of cost you’re covering with the guarded voucher or bill. Write down what the payment is about, jotting “office repairs” on hardware store vouchers or “client brief” on a lunch bill, for example.
7. Back it all up technically
Because you’ll have gone through all this work of digitizing, storing, and feeding apps or accounting software with your business expense records, back it all up on a cloud. You can also use related software that lets you have a copy of all your efforts.
8. Use your resources as a guide
With all of the above steps, it should become easier to have a general idea and a specific breakdown of where your startup funds are going. With that, power up your potential for financial decisions. Need to cut down on expenses? Take a look at all your records and go through your financial statements. You can also just check your SaaS tool manager. Use everything you have at your reach to figure out where you have room to spare in economic terms. Doing so can mean a significant advantage for growth towards profitability.