Small business expense tracking may feel like a hassle, but there are many important reasons to do it. Not only will having a solid grasp on your expenses help you improve your profits, but it will also make your life much easier when you need to apply for a business loan.
Don’t worry, though. Thanks to modern technology, expense tracking is now super easy! Here’s a look at some of the top tips to help you get started.
Why Small Business Expense Tracking Is So Important
If you want to run a profitable business, it’s important to understand where your money comes from and where it’s going. This will help you make smart spending decisions and develop strategies to grow your business.
When you’re taking the time to track your income and expenses, you’ll be able to notice potential problems quickly and become aware of any areas where you’re unnecessarily losing money. Once you get used to taking a close look at your expenses, you’ll also be able to accurately predict future cash flows and create and stick to a budget. Income and expense tracking also allow you to measure the return on your investments and puts you in a better position when tax time rolls around.
Simple Tips to Help You Get Started
Now that it’s clear just how important expense tracking is, it’s time to get started! These five simple tips will help you get on the right track.
1. Keep Your Business Banking Separate
Keeping your business and personal bank accounts separate is a smart move. If you haven’t already done this, start now. When you do, it will also make your small business expense tracking much easier. You’ll have fewer expenses to deal with and it will be much easier to evaluate your business costs.
2. Categorize Your Expenses
Putting each expense into a category will help you quickly see patterns so you can make adjustments. When you categorize your business expenses, you can also maximize your business tax deductions.
Some of the categories you’ll likely use include office expenses, marketing and advertising, payroll, benefits, travel, business vehicles, and the cost of goods sold.
3. Digitize Your Receipts
Each time you pay for a business expense, get into the habit of immediately turning the receipt into a digital file. For hard-copy receipts, you can use a scanning app on your phone. For email receipts, either save a PDF copy or take a screenshot. Then, store them all together in a central location with an easy-to-use filing system.
4. Use an Expense Tracking Tool
If you don’t have an accountant, using a budgeting app or an online accounting program, like QuickBooks, will probably be one of the smartest things you’ve ever done. These programs can integrate with your business bank account and automatically pull the information in. Some will even categorize your transactions for you. You’ll just need to review them to make sure the assumptions the program made are correct.
These software tools also often make it easy to generate and view weekly, monthly, or quarterly reports. This will allow you to see real-time data so you can make important decisions on the fly.
5. Review Your Books Monthly
Trying to reconcile books that haven’t been touched in forever is extremely frustrating. Save yourself the hassle by reviewing and reconciling your expense tracking system at least once a month. If you can do it every couple of weeks, that’s even better.
The more often you do it, the less likely it is that you’ll have to wrack your brain or search through records trying to figure out what an expense was for. If you keep up with it, it should only take five to ten minutes each time. Even better, when you need to apply for a loan, you’ll be able quickly and easily to provide the necessary information.
Need a Loan for Your Business? Zinch Can Help!
Once you have a clear picture of your business’s income and expenses, you may see that you’re potentially facing a cash flow issue or uncover a potential business opportunity. That’s where we come in. Zinch makes it easy to get the money you need for your business – without the hassle!
Contact us at (714) 500-6622 to learn more about your options. You could qualify for up to $250,000 in just 24 hours.
