Properly tracking business expenses is an important part of running a successful business. Not only does it help you at tax time, it helps you better manage cash flow, which is vital to your operations. If you're spending more than you thought because of a tracking failure, you may run into trouble very quickly. These tips can help you record and organize your business expenses.

1. Keep business and personal expenses separate

One of the best things you can do to better track your business expenses is to keep your business and personal expenses separate from the very beginning. That way, there will be no confusion over whether an expense was for business or personal reasons. Be sure to set up a separate business credit card, a business checking account, and a business savings account.

2. Make sure you know what counts as a business expense

It also helps to make sure you know what actually counts as a business expense and what doesn't. This will help you determine which account you use to pay for it. Business expenses may be tax deductible, so that’s an important reason to keep track of them. If you’re not sure about whether an item should be considered a valid business expense, ask for professional advice from your accountant or a tax attorney.   

3. Record any transaction ASAP, and always save receipts

Whenever you conduct a business transaction, whether it's an online purchase, a check to pay a bill, a credit card purchase at an office supply store, or cash at a restaurant for a business lunch, be sure to record the transaction as soon as possible to ensure it doesn't get lost or forgotten. Save every receipt you get in a designated place so you can always refer to them if you have a question later on. They will also be necessary in the event of an audit.

4. Use mobile apps

Plenty of apps are available for download on your smartphone to help you stay on top of finances and spending. Explore different options and determine which ones best suit your needs. The Balance1 has a list of what it considers to be the best seven expense tracking apps of 2019, including: Personal Capital, QuickBooks®, Clarity Money, Wally®, Mint®, YNAB®, and Mvelopes®,

5. Use accounting software

It's a good idea to use accounting software to make sure your finances are in order, and aren't being left up to memory and best guesses. Among the top-rated programs in 2019 are offerings from Intuit®, Freshbooks®, Wave®, Sage®, and Xero®.2

"Invest in accounting software to handle your small business expense tracking needs," says business consultant JT Ripton. "While Excel spreadsheets might be a good first step when you’re testing your market, that can quickly get unwieldy. Go pro by putting the finances for your business into a professional accounting solution."3

6. Hire a bookkeeper

If you find the software too intimidating, or if you simply don't have the time and/or skillset to deal with accounting, it might be wise to hire a bookkeeper to keep up with all of your finances. It will be their job to stay on top of expense tracking. They will also be able to offer you advice on how to improve your financial situation, making you aware of issues and opportunities. They can provide you with regular weekly and/or monthly reports so you can look for trends and address them accordingly. If you don’t need a fulltime bookkeeper, consider a freelancer or a service that lets you pay by the hour for bookkeeping services.

There are many ways to make sure you're properly tracking your business expenses. The key is recognizing that you must do so and sticking to it. By recording and classifying your spending, looking at trends, and acting on them as needed, your business will run more efficiently and have a more secure cash flow.

 

1. https://www.thebalance.com/best-expense-tracker-apps-4158958

2. https://blog.hubspot.com/sales/small-business-accounting-software

3. https://www.godaddy.com/garage/6-tips-for-small-business-expense-tracking/

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC