How to Track Expenses: If you have the correct tools in place, tracking company expenses couldn’t be easier. Doing so is important for managing your cash flow and exploring what you can do to increase your profitability. Tracking your company expenses also makes tax season a lot easier, since many expenses can usually be written off. On the other hand, if you don’t keep track of your costs on a regular basis, you’re more likely to overlook possible deductions, meaning you lose the money you could have utilized elsewhere. Read on to learn how to track your expenses in 3 very easy steps.
1. Start Off by Creating an Excel Spreadsheet
If you’d prefer a low-tech approach to managing your expenses or are just starting out as a company, creating an Excel spreadsheet is the perfect way to go. However, when your company expands and your spending rises with it, you’ll want to employ a more comprehensive monitoring system. This could be in the form of cloud accounting software.
Instead of utilizing automated expenditure trackers, creating your own spreadsheet from scratch requires manually taking note of every expense you incur, which can take up a lot of your time to manage, so this is something to bear in mind.
2. As You Grow, Automate the Process
If you regularly forget to note down your transactions or if you’re happy letting go of the reins, consider using an app that syncs with your bank and credit card accounts. Although this requires a little more patience while the bank verifies your transactions, every purchase, savings deposit, and invoice payment will appear on your app with no effort from you whatsoever. Most applications also allow you to monitor your income and expenses by connecting to your retirement and mutual funds.
Many applications will automatically categorize your expenditures. This is especially useful if you don’t have a lot of accounting experience. Automatic linking also encourages you to categorize every expense and consider the whole picture.
3. Regularly View Your Company Costs
As a company owner, you should make it a practice to evaluate your costs on a regular basis to ensure that they are correctly categorized and documented. Make it a habit to analyze your expenses weekly (perhaps as part of your weekly review) as this will help you maintain both accurate and timely records of your costs.
Don’t worry if you come across expenses that you’re not sure how to categorize. Make a note and come back to them when you’re reviewing your books, be it on a monthly or quarterly basis.
Make sure to contact our expert and friendly team at Key Capital for more advice on tracking expenses, solutions for business failure, and unsecured capital today.