Putting together a budget for your small business is the only surefire way of keeping track of all of your income and expenses, so if you haven’t written a budget yet, you need to get on that.
That being said, simply putting a budget together isn’t the only piece of advice you should be given when it comes to expense tracking. Here are five more critical tips for you to consider as well:
1. Be Honest With Yourself
First and foremost, you need to be one hundred percent honest with yourself when writing your business budget. Every expense your business is incurring needs to be included in the budget so it can be as accurate as possible.
2. Invest In Expense Report Software
Who says you have to write your budget down on paper? Expense report software will be a highly useful tool because it can generate a quick report showing whether your business is at a profit or a loss, list out of your available tax deductions (more on this later), and also list out each of your sources of income and expenses by specific categories.
3. Have A Separate Bank Account Made For Your Business
It’s very wise to separate your business income and expenses from your personal income and expenses, and to do this effectively, you’ll need to create a separate bank account for your business. You can then create a separate business debit and credit card as well, while also beginning to build your business credit.
4. Keep Track Of What’s Tax Deductible
A big reason to keep track of your expenses is so you will be fully aware of the specific expenses that are deductible come tax time. Examples of expenses you will be able to deduct include business use of your vehicle(s), your office space at home, work-related travel, meals, and entertainment, and even employee payroll.
5. Consider Hiring A Bookkeeper
Have you considered hiring a bookkeeper? You may be resistant to the idea because of the cost that comes with doing so, but the truth is that once your company becomes too big for you to manage the finances on your own, hiring a bookkeeper may become necessary.
There are many advantages to hiring a professional bookkeeper: they’re good with numbers and money, can give you strong recommendations on where you can cut your expenses, go through your invoices and receipts for you, and will help keep you out of tax problems with the IRS.
Keep in mind you don’t have to hire a bookkeeper full time. Rather, you can hire them for just a few hours at the end of each month.
Keeping Your Finances Under Wraps
Keeping track of your business expenses is simply the responsible thing to do as a small business owner. The tips you have learned in this article certainly aren’t the only tips out there for you to learn, but they are definitely among the most important ones.