Tracking your business expenses regularly ensures you always have up-to-date financial information available and makes tax filing is easier. So following these steps to make expense tracking quick and simple.
Step 1: Open a business bank account to keep all your business income and expenses separate from your personal ones.
Step 2: Choose an 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 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.
Step 3: Consider using cloud-based accounting software, such as QuickBooks Online, to streamline your accounting process and make it easier to track expenses. 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.
Step 4: Save an scan your 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 to keep track of your receipts. It lets you snap pictures of receipts in the mobile app. Then, saves the image to the right business category.
Step 5. Make sure you understand which expenses are tax deductible. This way you know what type of expenses to track. You might consult with your accountant for a complete list of tax deductible business expenses. But there are some expenses that are fairly common and easy to remember such as:
- Business-related travel and entertainment expenses
- Office equipment that costs less than R7000
- Transportation and vehicle expenses
- Telephone and mobile phone 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.