If you’re like most business owners, business expensing can be a real chore if you don’t have the right processes in place to manage it effectively. Luckily, I’m right there with you, refining my own process as I grow and have a few easy steps to share with you that I have found work really well.
Automate your expenses
As business owners, there are certain tools and technologies we use on a regularly basis that require monthly payments. From web hosting to email to the specific tools you need for your business – these fixed payments can easily be automated with your business credit card or business checking account each month. I use one business credit card so I have one bill to pay a month while I earn some rewards miles. This method will centralize all your business expenses so you can easily see what you’re spending and allow you to automate the process so you aren’t spending any extra time paying bills.
Use a bookkeeping service
I use QuickBooks and there are plenty of other accounting services out there that will help you collect payments and track expenses. When I opened my business, I even hired a bookkeeper to help set up my system properly so that I never had to spend time correcting anything later. Having the right system set up the right way from the start helps you run your business more efficiently. By linking up any business accounts with your accounting service, it can even automatically track and categorize all of your businesses expenses so that you can easily view profit and loss statements, see what your employees are spending, and be prepared for your CPA at tax time.
Have a documentation system
Good documentation habits are the best kind. You want to make sure that you have a system you follow to keep track of your receipts. Whether it’s printing out copies of everything and filing them away or scanning them so you have everything electronically – make sure you are keeping records of everything you plan to claim as a business expense. I take a picture of my receipts and store them in an Evernote notebook so I don’t have to keep the paper. Freshbooks allows you to take a picture of your receipt with their mobile app and log the expense in real time and then you’re done – expense captured and documented.
Review and update
As you might do with your clients, you should put monthly business review meetings on your calendar to see how you’re business is performing each month. Make sure your expenses and your employees expenses are being documented and organized properly to avoid any time-consuming clean-up projects later. Aside from keeping you organized, reviewing your business financials on a monthly basis will also alert you to any important changes to cash flow or costs to do business. You may even discover more ways to cut costs by remaining keenly aware of the services you spend on and how essential they are to your business.
Whether you are a brand new business or have been established for a while, this simple four step business expensing process is valuable and scalable to any size and complexity of business you own and operate.