If you have the correct tools, keeping track of business spending is a lot easier. These tools will assist you in making keeping track of your business spending a daily habit. As a small business owner, this will allow you to keep a closer eye on your spending. Additionally, greater expense management will increase profitability.
Tracking your business expenses makes tax time a lot easier because many of them can be written off. You’re more likely to miss potential deductions if you keep track of your costs regularly. As a result, you’ll pay less in taxes (or get more back).
Some ways to do this include:
Open a Business Bank Account
The distinction between personal and business funds can be fuzzy for freelancers and small firms. You may find yourself sifting through your grocery and clothing purchases for company expenditures come tax time.
Open business bank accounts to keep track of all business-related spending. Then, for all company purchases, use your business accounts. Using a money tracker makes arranging your finances much easier, giving you more time to focus on the important things.
You’ll need to do the following:
- A chequing account for a business
- An account for business savings
- A credit card for business
It’s also a good idea to place your business spending on a rewards credit card. On certain credit cards, you can get cashback on your purchases. Others allow you to accumulate points and use them to book flights and hotels.
Create a Billing Template
Create an invoice template in your accounting programme or by downloading one from the internet. Most service-based small businesses provide credit, which means they issue an invoice when a project is completed and allow the customer to pay later.
On each invoice, payment terms must be specified. This should include your contact information, how to pay you, and when the invoice is due—a decent rule of thumb is 30 days after mailing the invoice. Payment processing information ensures that no errors occur later on and that the funds get into your account in a timely manner.
Payment terms might assist you in getting paid on time and make it obvious when you should be paid. This will help you manage your cash flow, which is critical for a new small business.
Create an Excel Spreadsheet
If you prefer a low-tech approach to managing your spending or if you’re just starting as a business, this choice is ideal. However, when your company expands (and your spending rise with it), you’ll want to employ a more comprehensive tracking system. Cloud accounting software is one way, which will be discussed in the next section.
Instead of using automatic expenditure trackers, creating your spreadsheet from scratch entails manually keeping track of every expense you incur during the day.
You’ll have to create your categories and sort them into different columns. If you have access to Excel or Google Sheets, following the instructions below should be pretty simple.
Spreadsheets can also be easily imported into accounting software to enter expenses in bulk. Excel or Google Sheets will work with almost every accounting software.
Create a spreadsheet in Excel or Google Docs with the columns listed below:
- Costs associated with marketing, such as your No-Code Website Builder
- Meals for clients
- Rent/mortgage and utilities for a home office or an office
- Expenses for travel
- Supplies for the office
Hopefully, these three tips will help you to get a handle on your small business finances. Do you have any other tips that could help? Please share some of them in the comments below.