Running your own business is never dull. Every day presents you with new challenges. Something that keeps you learning. One example of this is keeping on top of your business financials. Before running a business, most people have not had to file a tax return, run accounting software, or create invoices. They soon learn how to do it and it all becomes second nature.
But there is one thing a lot of people still struggle with and that is keeping track of their expenses. It is one of those jobs that seems to slip down the to-do list. This is a shame because properly recording your business expenses has a big impact on your bottom line. If you don’t do it, you will certainly end up paying more tax. So, with this in mind, I thought I would share a few tips and tricks to stay on top of your business expenses.
Use the right software
Top of the list is going to a website like freshbooks.com and investing in the right software. This tool makes expense tracking super easy. When you buy something for your business or materials for a job you just need to pause for a moment and scan the receipt. Once that is done you simply assign it to the right category. That’s it. Your expenses are 100% up to date and it is super easy to keep them that way.
When you file your taxes, you have all of the figures you need to be able to deduct your expenses. As well as the information you need to be able to add the cost of materials you have bought to each client’s bill.
Periodically review what you are spending your money on
If you want, you can leave things there. But it would be a shame if you did so because your business expenses data can help you to run your company better. It is worth periodically pulling off a summary of what you have spent.
Doing so gives you the chance to spot and deal with wastage. If you work alone and are getting through 30 pens and 10 notepads most months because you are losing them. there is a good chance that investing in a digital notepad, like this one will make financial sense. Provided you get into the habit of slipping the pen into the spine of the pad and carrying it everywhere you will never need to buy another paper notepad again.
Double-check that all expenses are being tied to each job
Printing off these reports also gives you the chance to double-check that you are charging enough for your products and services. If you have to travel to London once a month to visit a client you work with regularly, make sure that you factor the cost of your train fare into your overheads. Plus, of course, your time. You will be surprised by how often you end up realising that a client you thought was profitable for you actually isn’t because you have not been factoring in sundry expenses when working out how much to charge.
If you use other tools to keep track of your small business expenses please let me and other readers know, by commenting below.