- Open A Business Bank Account
The first step to transparent business expense tracking is to separate your business account from your personal bank account. Come tax season, it will be an impossible task to find the right business expense heads in the midst of grocery bills and rent receipts.
Having a separate business account will help you organize and track your business expenses without any confusion, or the worry of missing any tax or legal obligations. To this end, you’ll need to have the following:
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- A separate business bank account for your business finances
- A business savings account
- A business credit card
- Store and Organize Receipts Properly
To ensure accurate accounting and bookkeeping, all your receipts (physical and digital) need to be stored and filed correctly. This also ensures an accurate tax deduction. If you are dealing with physical receipts, you need to do the following:
- Make a separate storage space to keep all your receipts
- Use file folders to organize your receipts on a weekly/monthly basis
- Set a specific time aside each day or week to file and organize the reciepts
- Use binders or plastic sleeves to separate the receipts by category and label them correctly
As you can see, this involves a lot of work. It takes up not just a lot of your time but also a significant amount of storage space in your office. Yet, it does not guarantee complete accuracy. One single mistake can undo all your efforts to track the expenses correctly.
If that’s the case, then how to keep track of business expenses with complete transparency and accuracy?
The answer is digitization and automation. To avoid errors and inefficiencies, you can simply turn all your physical receipts into digital copies by scanning and uploading them to a designated location on your computer or even on the cloud. For example, the Field Promax mobile app lets you upload any document or image, including receipts, to your company’s central database from anywhere to ensure secure storage and efficient organization.
his brings us to the third and most important step of tracking business expenses.
- Choose the Right Digital Tool for Tracking Business Expenses
When you ditch physical receipts and digitize your expense tracking, there are two methods you can follow to organize them– a simple spreadsheet or advanced accounting and business expense tracking software.
Most small businesses use MS Excel spreadsheets or Google Sheets to store, organize, and track their receipts. The reason for this choice is that it is free and familiar. However, this form of digitization still involves a lot of manual work. You will still need to manually enter every single expense detail, organize them in specific columns and categories, and manually search for a single document when you need it. Evidently, it is most likely that you forgot to add a receipt. And even if you don’t forget, you can’t ignore the chances of double entry.
The task becomes even more complicated when your business expands and your expenses grow. The sheer amount of data to be entered and organized makes it almost impossible to keep track of all your expenses correctly. This is why most businesses today are leaning towards business expense tracking software instead of simple spreadsheets.