If you’re running a small business, tracking your monthly expenses is just as important as keeping track of your income—maybe more so. You can never know how your business is actually performing unless you know how much you’re spending every month.
Not only that, says Abacus Bookkeeping CEO Kerry Postel, expenses in a given month can have a direct impact on those in subsequent months. So it’s important to carefully track every expense, every month. Postel says without monitoring expenses on an ongoing basis, it’s easy to be surprised at the end of the month. But, this is one surprise business owners can take steps to avoid.
Tracking your business expenses every month gives you the intelligence to make good (or better) decisions in future months. And if you’re on top of your expenses in real time, you’re better able to spot opportunities for immediate savings or efficiency buying. Need to cut costs? Having a handle on your expenses will enable you to do it quickly and intelligently. Tracking and capturing every expense is also critical to your ability to claim all the deductions you’re entitled to at the end of the year. Sloppy record keeping can cause you to miss out on some hard-earned tax breaks. Nobody wants that!
Specific expenses vary across business categories and individual businesses, but as contributor Sabah Karimi writes on voices.yahoo.com, there are six monthly expenses that are the most common and that you need to plan for over the course of the year. Paying attention to these will help streamline your projections of long-term costs and profits, as well as set your annual and quarterly financial goals and budgets. The six include:
- Salaries, benefits and payroll taxes
- Marketing and advertising
- Cost of goods sold
- Office and supplies
And with these more common groups firmly in your sights, don’t forget that closely monitoring your expenses will also help you respond to unexpected expenses that occur. With some foresight and luck, things like legal fees or licensing, upgrading technology or replacing other kinds of outmoded equipment can be budgeted items. But there will also be emergencies as well as opportunities that are best managed when your expenses are firmly under control.
However well you monitor and manage your expenses, small business owners still need to always be on the lookout for ways to reduce them and at the very least, manage them more efficiently. Now there are countless choices in software packages and apps to help you do just that. Start exploring some of the newest and most transformative of these with contributor Heather Clancy’s list—8 options for taming small business expenses—on zdnet.com, which focuses on mobile and cloud resources. Clancy’s list includes everything from a mobile wallet that doubles as a pre-paid expense card (a new suite of Apple iOS and Android applications called PEX Mobile) to individual apps that help you organize receipts, generate reports and track and categorize expenditures.
You can find some additional tips to help you track business expenses at smallbizbee.com. Among them are common-sense tips that bear repeating:
- Always keep business and personal expenses separate with different bank accounts for each.
- To make tracking super easy, use a credit card (ideally, an exclusive business-only card) for business purchases and either this credit card or online bill pay for bills.
- Get—and safely store—tax receipts for all expenses, even the smallest.
- Regularly update your account books and software to avoid confusion and errors.
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