Business expenses are an integral part of any organization. Yet, when it comes time to start pulling everything together for taxes or an audit, many professionals find themselves overwhelmed, pulling out their hair trying to track down receipts and other documents and wondering if they’re missing anything important. To avoid this, here are five simple things you can do to be more proactive about tracking your business expenses.
Segregate Funds – Even if you’re a sole proprietor, keeping business and personal funds separate is a good idea. Create a separate business account that you will use solely for all of your business transactions. This makes it much easier when it comes time to review expenses because you won’t have to weed through months of transactions to figure out what was personal and what to allocate to your business.
Keep Receipts Organized – Spending hours trying to track down a wayward receipt from 11 months ago will not only slow down your progress and pull you away from focusing on more important business matters, but it could get you in some hot water if you’re being audited. Make a habit of filing receipts away in a box or accordion file, and then set aside time each month to organize those receipts by date.
Utilize Your Electronic Calendar – If you’ve got a smartphone, it probably contains a built in electronic calendar. Take advantage of this handy feature by making a note of expenses as they occur. This will make it easier to organize your receipts when the time comes. It’ll also provide you with a guide to make sure you’re not missing anything.
Leverage Software – Most business accounting software programs have a place where you can easily enter business expenses and categorize them accordingly. Come tax time, or in the event of an audit, you’ll easily be able to round up a list of expenses with the simple click of a button.
Hire a Professional – As a business owner, you have more important things to worry about than managing all of your expenses. By hiring a bookkeeping firm to handle these tasks on your behalf, you will be freed up to focus on things like increasing sales and business growth while having the peace of mind that your financials are being taken care of behind the scenes.
Staying on top of your business expenses doesn’t have to be a headache. By being proactive and knowing when it’s time to bring in the help of a professional, your financial information will be well organized and ready to access at a moment’s notice should the need arise. This will make otherwise stressful events, like filing taxes and dealing with an audit a breeze!
