Money Insights: Expense Tracking Tips & Tools for Startups and Small Business Owners

Small business owners or startup founders probably don't have a massive budget. It's also true that small expenses can add up, and if you don't track your spending, it will be challenging to know where your money is going....



Money Insights: Expense Tracking Tips & Tools for Startups and Small Business Owners

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It's vital that you track your expenses to know exactly where your money is going and so that you're aware of how much you're spending. In most cases, when you manage your money efficiently, your company may be in a better financial position. Tracking your expenses is also helpful for tax purposes.

It may seem like tracking your expenses will be time-consuming, but it doesn't have to be. Consider the following tips to help track your business costs. 

Have a Separate Business Banking Account
Using your bank account for your company may seem convenient, but it can be complicated to track your business expenses. In addition, identifying your business expenses can pose a challenge, as it's easy for them to get lost on your bank statement among the rows of personal expenses like grocery shopping, rent and other costs.

To simplify the process, keep personal accounts and business accounts separate. It's advisable to have a separate business check, savings and credit card so that if you don't have cash, you can use your business credit card for purchases related to the business. 

Also, don't use any personal loans such as for the business. It might be a better option, in this case, to take out a separate personal loan for the business, like a payday advance online loan and repay it with money from the company. 

Use an Expense Tracking App
An expense tracking app allows you to record all your expenses digitally so that you don't need to manually input your receipts into a spreadsheet. This does not necessarily mean you get rid of your physical business records. If you're old school, write them down in a notebook for reference. 

Some apps let you link your credit or bank cards to them so that they automatically update, while others will enable you to upload your receipts onto them.

There are many expense-tracking apps and software available. Some are free, some allow you a certain number of uploads for free, and then you have to pay to use them, while others require you to pay for them before you can use them.

Avoid Using Cash
It may be easier to avoid overspending when you control the instances you pay in cash. There may be no paper trail when you use cash, especially in petty cash expenses, and it can be hard to keep track of.

Unless you are disciplined enough to record every amount you spend in cash, making business purchases with a credit or debit card could be more efficient.

This way, the money you spend will reflect on your statement, making it easier to keep track of. 

Keep Your Receipts
Make it a habit to file all your paper receipts. The IRS requires small businesses to keep a record of their business expenses for three years.

The way you choose to file them is up to you. You can file them in folders, binders or plastic sleeves by month or category as long as the documents reflect your income and expenses. For example, your categories may include marketing expenses, stationary, or client entertaining. 

If the receipts don't specify what they were for and only have the amount you paid, it can be helpful to write down what the money was for on the back of the receipt. 

Final Remarks
It's helpful for small businesses to keep track of their expenses to know where money is being spent and make it easier to do their taxes. Some good ways to track your costs include:

  • Keeping personal and business accounts separate
  • Filing receipts
  • Paying by card 
  • Using expense-tracking apps

References


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