How to track business expenses (and why it’s important)

Whether you are in a freelance business or own your own corporation, tracking and maximizing deductions is an important part of running your business profitably. Understanding the details surrounding deductions and exemptions can potentially save you thousands of dollars over the course of a year.

Tracking business expenses is important for a number of reasons: it is the only way to ensure that you are taking all of your business deductions. it will help you figure out your true profit, and it will help in tax time so that you do not get surprised with a huge bill.

Scan all your receipts and save them in a digital format instead of in paper or print.

Tracking your business expenses is an important practice if you want to boost profits and minimize taxes. Besides, there are a few tax benefits for small businesses. The first is the traditional method of auditing receipts each week/year. The second option is much quicker and easier for most people: digitizing all your receipts (and other business documents) with a receipt scanner.

Use software to categorize and organize your expenses so you can track them more easily.

Keeping receipts, bank statements, and other documents in a folder or box is a waste of time and energy. Plus, the accounting software and plug-in make it easy to quickly track expenses on the go. 

The chance of knowing how much money you spend during the month is very slim, but with a good Microsoft Excel template and the right tools, this can easily be accomplished. One of the best things about accounting programs like QuickBooks, sage 200 is that it allows you to categorize all business expenses.

Have a dedicated business bank account and card

The most efficient and effective way to manage business expenses is to have a separate business bank account. Credit card and dedicate this to your business activities. Having a dedicated business account will help you keep track of all expenses, both big and small with ease. 

One of the more important business practices is to have a business bank account and dedicated credit card. There are times when you will be ask to provide proof of your expenses, so being able to produce these records come in handy.

Make a habit of reviewing your business expenses every month.

You need to keep accurate records to manage and grow your business. Issue invoices to clients, and if you are audited, you will need the information to support your tax return. Expense tracking is important for many reasons. 

If you are self-employed, running a business or serving in a trade position, the deductions from your taxes can vary significantly, depending on how well you document your expenses. By identifying your business expenses and tracking them, you are able to substantiate the ones you have deducted on your returns if you run into an audit.

Conclusion

Now that you have a good overview of how to track your business expenses. It is time to look at keeping track of your expenses. Whether you are self-employed or a large corporation. Tracking those expenses across the board can be time consuming and downright painful sometimes.

You’ll have a clear picture of how much money is coming in versus how much is going out each month so eliminating unnecessary spending will be straightforward. We are best QuickBooks hosting providers. Finding a balance between personal and business expenses can be tricky. Business owners have to ensure that all their expenses are documented, accounted for, and reported on. However, you need to make sure that you are also making a reasonable effort to track down personal expenses. So you can reduce the amount of tax you owe at the end of the year. In addition, writing it off comes with a few pitfalls as well.