Tracking and managing the costs associated with operating your business can seem overwhelming. However, with a few smart systems in place, you can regularly review your business expenses to pinpoint unnecessary expenditures, cut costs and be better prepared come tax time. Here are a few ways to streamline the way you track and manage your business expenses.
Choose accounting software that is compatible with your accountant, such as QuickBooks or Microsoft Office spreadsheet templates. Use it regularly to simplify, track and manage expenses, while making it easy for your accountant to import information directly to your tax return at tax time.
BE TIMELY WITH A MOBILE APP.
Avoid receipts and expenses piling up by using a mobile app and cloud-based solution to track expenses wherever you are. With today’s technology, you can record and categorize expenses related to travel, entertainment, office supplies, association fees, etc., as you go about your business day. Managing receipts becomes simpler when tracked and stored digitally. Look for products that integrate easily with your existing accounting software.
NEVER MINGLE BUSINESS AND PERSONAL FUNDS.
Commingling funds between your personal and business accounts adds unnecessary complexity and can be a red flag for IRS scrutiny. Make it a rule to never use personal cash, checking accounts or credit cards for business expenses:
- Using business credit cards streamlines expense recording, since business credit card statements typically break down your monthly, quarterly and annual spending into categories.
- Most retailers now accept credit cards for amounts as small as $5, so there’s little need to carry cash.
- Petty cash expenditures can create problems if not adequately tracked. A best practice is to limit the use of petty cash to times when it’s absolutely necessary and keep track of all cash expenditures in your financial software.
MONITOR EXPENSES REGULARLY.
Using your accounting software, you can create weekly and monthly reports to regularly monitor your expenses to see if they’re in line with your budget. Look at each expense to figure out where you can cut back, starting with those that don’t directly contribute to the bottom line. Regularly documenting and reviewing data saves you time in the long run and ensures your financial records are always up to date.
For help getting your business expense tracking and managing system in place, contact the Economic Development Collaborative-Ventura County. Conveniently located in Camarillo, California, we’re here to help.