Are you tracking your expenses? Are you tracking ALL of them?
Expense tracking can be very boring, mundane, and consumes a great deal of your time. I bet you say, “Oh, I’ll take care of those expenses when I have more time.” Yeah, we’ve all been down that road and the next thing you know is that you have a mile high pile of expenses receipts.Tracking our expenses isn’t a task that we want to do. Most of us would prefer working on other aspects of our business ~ not paperwork.
We will discuss here the:
Benefits of tracking expenses
Ways to track expenses
How to track expenses
Benefits of Tracking Expenses
The benefits of tracking your monthly expenses for your business are enormous. Some of the big benefits are:
Keeping up with your cost on inventory
Invoicing a client correctly
Staying within the budget you’ve created
Tracking your spending for cash flow purposes
Taking deductions on your tax return
Knowing your spending habits so that you can improve your income
These are all important benefits. But, you sure don’t want to leave any expenses on the table that could have been taken on your tax return. This would help to reduce that taxable income.
Ways to Track Expenses
I’m so very thankful to be living in the digital world. It has opened up many ways to track expenses. Here are some of the ways you can track your expenses:
Manually entering and creating a spreadsheet on paper
Using an excel spreadsheet and manually entering the expenses
Computer desktop software such as Quicken or Quickbooks Desktop
Cloud based accounting software such as Wave, Zoho, Freshbooks, Quickbooks OnLine, or Xero
How to Track Expenses
How are you going to track your expenses? You will need to find a system that works best for you. If you don’t like the system, then you probably aren’t going to use it. You are then back where you started from ~ not knowing how your business is doing.
There are several affordable choices to make depending on the size and income of your business. How to track expenses will depend on what system you decide to work with.
Paper or Excel - you will need to manually input the data into columns of expense type for categorizing the expense on a daily, weekly, or monthly basis. For example: rent, utilities, office supplies.
Accounting software - most accounting software will let you connect your bank and credit card accounts to the software. The software can pull in the transactions on a daily basis, thereby stopping the manual input. The transactions will still need to be categorized and checked with the monthly statement of your bank or credit card. By checking the statements you will make sure everything for the month was pulled in. You will also be sure that there aren’t any duplicates.
Outsource - hire a bookkeeper to do all the tedious accounting work on your business. This will free up a huge amount of your time to actually let you run your business.
I’m telling my age here, but I clearly remember tracking expenses by hand on paper journals. That was really tedious and took all day.
My personal favorite way to track my business expenses is by using Xero - accounting software that is cloud based. I can pull anything up at anytime wherever I am. I’m not tied down to a particular computer to find out any information. When I’m on the go, I can take a picture of an expense receipt on my iphone using the app or log into the account for any information needed.
Please contact me at email@example.com for a free consultation. I can help structure your business to give you back free time. Free time to spend with family, take a vacation, read a book, or market your business. You have the freedom to decide!