No matter what the nature of your business, it's important to keep track of every penny you spend. Accounting for your expenses properly can help you identify waste and inefficiency, while at the same time maximising your allowable deductions when you prepare your tax return. You have a number of tools to make tracking business expenses easier, from spreadsheet programs and accounting software to that envelope on your desk.
Something as simple as a dedicated envelope where you throw your receipts for the day can help you get organised. Once those receipts accumulate, you can enter them into your accounting software or spreadsheet package. You should, however, keep those receipts for your records. You need these for you VAT return and for deductions from your company tax.
Business credit card
One of the simplest ways to track the expenses for your business is to charge every purchase to a company credit card. This strategy only works well if you have the cash flow to pay the bill in full each month, otherwise the high interest charges can become a burden. Many business credit cards provide a monthly, quarterly and annual breakdown of spending in a wide variety of categories, including vehicle expenses, office supplies, services and computer equipment. Charging your purchases to a company card also helps you avoid mixing business and personal expenses and makes it easier to transfer allowable deductions to your tax return.
Chances are you already use Microsoft Office in your business, and that office suite includes a powerful spreadsheet program you can use to track your business expenses, create and maintain a monthly and annual budget and track your profit and loss. You can download a number of business-friendly spreadsheet templates, including ones that let you plug your expenses into a spreadsheet that has already been created for you. Once the numbers are in place, you can easily track your spending in a number of different categories and export that data to other programs as needed.
Software such as Quicken and QuickBooks is designed to help your small business keep track of its expenses. One big advantage of this type of software is that it can easily integrate with popular tax preparation programs such as Turbo Tax, allowing you to import expense and revenue information directly from your accounting software to your tax return. When shopping for a small business accounting software package look for one that is easy to use and intuitive. You can ask your colleagues in the business community for recommendations, or you can try out several packages and choose the one that best meets your needs.