Tracking your weekly and monthly business expenses ensures you always have up-to-date financial information available. It also makes it easier to claim tax-deductible business expenses when tax season rolls around.
Follow these five steps to make expense-tracking for your small business quick and simple.
1. Keep your personal expenses and business expenses separate
As a small business owner, it’s likely you will have some overlapping personal and business expenses. It’s important to keep these separate so you have an accurate understanding of your business’ costs, and to make sure you’re claiming the right amount of tax-deductible expenses at tax time.
With this in mind, it’s a good idea to open a business bank account to keep all your business income and expenses separate from your personal ones.
2. Choose your small business tracking accounting method
Most small businesses use the cash accounting method, which records income when it’s received and expenses when you make the payment.
The accrual method, on the other hand, counts sales when you make them, even if you haven’t been paid yet, and expenses when a purchase or service is received, even if you haven’t paid for it. But it typically suits large corporations better and it’s more complicated.
3. Consider using cloud-based accounting software
With cloud-based accounting software like QuickBooks Online, it’s easy to track your expenses and income throughout the year. When tax time rolls around, you’ll have all the information you need at your fingertips to file your tax return quickly and correctly.
And because it’s housed in the cloud, you, the employees who handle your accounts receivable, accounts payable, and payroll, and your accountant can access it anytime from any place.
4. Save and scan your expense receipts
When tracking your business expenses, you should keep the receipts for any business-related purchases you make. To make the process simple, consider using the same credit or debit card to make business-related purchases.
You can also use QuickBooks Online to keep track of your receipts. It lets you snap pictures of receipts in the mobile app and saves the image to the right business category.
5. Take advantage of tax-deductible expenses
Many small businesses miss out on valuable tax savings because they’re unaware of all the expenses they can claim as a deduction to their taxable income. In fact, claiming back legitimate business expenses on your tax return could save you thousands on your tax bill.
Also see our tax deductible expense for self-employed which details lists of expenses you can quickly check off if you are a self employed business owner in South Africa.
What can I claim back from SARS?
According to SARS, deductible business expenses are “expenses incurred in the operation of a business”. In other words, any purchase you make for the purpose of running your business counts as a business expense – and could be claimed back on your tax return.
Some of the most common tax-deductible expenses in South Africa include:
- Material and equipment costs
- Employee costs and administration costs
- Business/office rental costs
- Office supplies
- Phone costs
- Travel and transport, including business vehicle costs
- Uniforms (if needed)
- Wholesale purchase costs for goods resold
- Financial charges (such as bank fees), utilities
- Legal fees
- Insurance fees
- Marketing, advertising and promotion costs
- Equipment and machinery
- Business vehicles
- Renovation costs
- Hardware, such as computers
- Education expenses
- Client entertainment expenses.
For more information, see our guide to tax-deductible small business expenses.
Tracking your business expenses might sound like a tedious process, but it’s easy. If you make expense tracking a daily task, it’s a lot easier to keep your business finances on track.
What’s the best app for tracking expenses?
If you’re just starting out in business, you might be able to get by with a simple income and expenses template in Excel or Google Sheets. But as your business grows, having a dedicated app to manage your income and expenses will be a major time-saver.
With QuickBooks Online, you can record and monitor income and expenses from anywhere, on any device. Snap and save photos of receipts with our mobile app, and we’ll automatically match all your receipt information to an existing transaction. Plus, you have profit and loss statements, balance sheets, year-over-year, financial comparisons and more, all available at your fingertips.
Try expense-tracking in QuickBooks Online South Africa for yourself. Sign-up for a free 30-day trial (no credit card required).