Accounting and tracking expenses are a big job when you’re an established business. When you’re just starting out and don’t have procedures and processes in place, it can seem like an insurmountable problem. You probably aren’t even entirely sure yet what counts as a business expense. So, figuring out how to keep track of business expenses properly is even more complicated.
A good financial adviser or startup specialist can help you to figure out what you should track. Technology can help to make it easier to do while you get through this exciting, busy, confusing time in your business’s lifespan.
Why Track Expenses?
The first thing you need to know is why you need to track business expenses. There are several reasons you want to know what you’re spending:
- So, you can make sure you’re staying on budget
- To ensure that you’re making a profit – early on, your assumptions might need to be tweaked!
- So that you can claim the correct amounts back when you do business taxes
- To identify areas where you might be spending too much
Real-time cost tracking is not the most fun part of starting a business, but it might be the difference between success and failure, so you need to learn to love it.
Even if you’re not entirely sure what business expenses you should be tracking, you need to keep all the relevant receipts and invoices. Every time you buy something for your business or spend money on a business event, business travel or similar, keep the paperwork. You can always verify that you can claim the amount later, but you will need the documentation for your records.
Many businesses accounting packages like QuickBooks allow you to take a picture of your receipts. This is a great way to keep track of spending, and a good backup to your hardcopy receipts and invoices.
There will be unexpected expenses when you’re starting your business. But you should try to limit impulse purchases as much as you can. Plan your spending carefully, and whenever possible, shop around for the best deals on products and services you need. Negotiate discounts with suppliers you will use frequently and find out if there are tiered discount structures or loyalty bonuses for products and services you use often.
Get a Business Bank Account
Even if you are starting a business on your own, as a sole proprietor, you need a separate business bank account. This makes it so much easier to track the money that is coming into your business and what you are spending.
Whether you use high tech tools for real-time cost tracking or a shoebox for receipts, never put it off. Enter the expense, track it in Google Sheets or get it in the shoebox immediately. When you’re starting a business, you have way too much on your mind to remember everything! You will forget expenses and purchases if you wait to record or track them.
Get the Right Software
You could try to make do with a patchwork of spreadsheets or Google Sheets. But the truth is, most cloud-based accounting software is very affordable these days.
You can get a professional bookkeeping package like QuickBooks for a few dollars a month – which is less than it will cost you in time to set up and manage a spreadsheet. You can still use the spreadsheets though – especially if you have a shared document where various people are tracking their expenses in one place. Many accounting packages do allow you to import certain file formats.
If you are using a patchwork of systems to track expenses (and many startups and even established businesses do) you don’t have to spend hours every month manually entering and importing everything.
LiveFlow is a cutting-edge tool that takes all your financial data from all the various places you store it and pipes it into your Google Sheet in real time. This way, you don’t have to capture the data twice, and you’ll never forget one information source. Once it’s connected, the system does it for you!
While you’re working out how to keep track of business expenses the best way, LiveFlow makes sure it all goes to the same place, so you’re always on top of things.