Tracking expenses is a necessary part of any business. And the larger your company grows, the more employees you’ll have incurring business expenses. Whether you’re making large purchases, have recurring receipts, or are just trying to help your sales team get a handle on their expense reimbursement requests, here are 10 tips to help keep your business expenses accurate, updated, and above board.
10 Tips for Tracking Your Business Expenses
1. Keep Business Receipts Separate.
Stay organized to prevent mixing business and personal receipts. Designate an envelope to hold all business receipts until your return to the office. If you can’t carry it with you, make a quick notation at the top of each receipt before you tuck it away in your wallet to identify which receipts are business-related.
2. Know What Qualifies as a Business Expense.
Make sure you have a clear understanding of what qualifies as a business expense and what doesn’t. If you’re not sure, talk to your manager, the accounting staff, or your company’s bookkeeper. If you lead a team, offer training to your employees so they know what expenses are reimbursable to prevent frustrating misunderstandings.
3. Record All Expenses Immediately.
Don’t delay recording your expenses. Even if you’re uber-organized, the longer you wait to record and submit your expense report, the greater the chance of an error. Recording things right away also makes the task easier, and you’ll be able to recall which accounts specific receipts should be charged to, rather than trying to piece together your expense report weeks after the fact.
4. Hold Your Employees Accountable.
Develop clear company policies around tracking expenses and submitting expense reports. Thoroughly train your employees so they understand the expectations. Hold them accountable for expense report submission deadlines and require appropriate receipts or back-up documentation. These procedures ensure that you have all the information you need at tax time, and also help streamline the expense report process to reimburse your employees promptly.
5. Limit Petty Cash.
Petty cash can be rife with problems. Money may go unaccounted for, receipts get lost, and internal fraud can occur. Avoid making petty cash available unless it’s absolutely necessary. Since technology like Square and mobile pay has made it easier than ever for most vendors to take credit cards, you may be able to avoid having petty cash altogether.
6. Use a Credit Card.
Credit cards automatically record all transactions, making expense tracking a breeze. While receipts and back-up documentation are still necessary, using a card designated only for business expenses makes it simple to prevent confusion between business and personal expenses. If you frequently incur business expenses but your company does not issue company credit cards, consider opening an account with no annual fee to use solely for your work-related purchases.
7. Use Accounting Software.
Accounting software automates a major business function. Enter and organize business expenses, create invoices, and reimburse employees. Create reports with the click of a button. Tracking expenses becomes simple when you use the right tools!
8. Use a Mobile App.
A mobile app makes tracking expenses simple. Since it’s accessible from anywhere, employees can record expenses immediately at the point of sale and even take a picture of the receipt to upload with the line item. A mobile app eliminates lost receipts, illegible notes, and forgotten purchases since all the information can be entered right away.
9. Monitor Expenses.
Tracking expenses is the first step. Monitoring them over time is the second. Business expenses should exist for one thing – to contribute to company profitability in some way. Run reports regularly to track expenses vs. revenue. Make sure that your business expenses have a good ROI. If they don’t, or if you find that you’re overspending in certain categories, make changes to your policies to reign it in.
10. Consult a Professional.
If you’re a small business, use a bookkeeper to help with your day-to-day financials. If your business is large and you have in-house accounting staff, use a business tax professional at tax time. Preparation should be simple if you’ve stayed organized throughout the year, but they will make sure that your claimed expenses are legal and that you get the maximum deductions and tax credits.
Track Expenses with MindSalt
MindSalt is the online expense tracking system you need! The web-based platform allows your employees to log in from anywhere and record expenses immediately – including photo receipts. Turn logged expenses into an employee reimbursement request or create a customer invoice for project-related expenses at the click of a button: no more lost receipts, outdated forms, or confusing processes. You never knew tracking expenses could be so easy. Sign up for a free trial today!