Expense tracking is one of the most important parts of owning a small business. After all, no one wants to face an audit completely unprepared.
But, it can be confusing and time-consuming to manage business expenses, especially if you’re just starting out. That’s why you need the right tools (and the right tips) to stay on top of your business transactions.
This guide will give you all the record-keeping tips you need to take on your small business accounting.
1. Separate Your Bank Accounts
Opening a business bank account can help you keep your personal finances and business finances separate. That will make it much easier to track your expenses and your profits.
Having a separate bank account for your business will also help to protect your personal assets should your business take any unfortunate downturns.
You can likely open a separate business-specific account at your personal bank. However, there are also online-only banks that provide business accounts, as well as corporate credit cards. Try to learn about corporate cards as much as you can before agreeing to anything, though.
It can even be helpful to open multiple business accounts. This way you can record transactions and income separately.
2. Invest in Proper Accounting Software
It’s pretty much a necessity to have the right accounting software these days. Technology can help you simplify your accounting process and free you from the clutter of too much paper. Plus, you can link your business bank account to your software to make things even simpler.
Some software will even help you to calculate taxes and receive online payments. The right software for you will depend upon your type of business, your volume of business, and the intricacies of your business.
3. Don’t Lose Your Receipts
There are many reasons you should keep track of your receipts. These include:
- Validate tax deductions
- Confirm bank statements against your books
- Record your transitions for business expenses
You can use a business expense tracker to scan your receipts and keep them all digitally. This way you don’t have to be bogged down by folders and boxes full of paper.
Small shops will likely already have a point of sale (POS) system that is digitally keeping track of receipts. Be sure to keep these records for future use.
4. Plan For Tax Season
Preparing your taxes can take a long time. Especially if you don’t do any prep work beforehand. Some business expense tracking software will keep track of your income and calculate your taxes for you.
Some businesses will not pay taxes as they go. Instead, they will file one-time self-employment taxes during tax season. Plan ahead by setting aside your estimated taxes, so you’re not hit with a large bill all at once.
Stay On Top Of Business Transactions
Now that you know some important tips for keeping track of your business transactions, you can stay on top of your business expense management. The most important thing to remember is to stay diligent and on top of things, as they can quickly pile up.
To learn more about managing your small business, review our How To section for all the latest tips.
