Financial problems are the biggest threat to small business success. Confusing tax regulations, health insurance complexities, a lack of available capital, and old-fashioned disorganization all pose a risk to a company’s bottom line. Not sure how to make sure your company stays the course? Start with expense tracking. Here’s how to do it well.
What is Considered a Small Business?
The term “small business” encompasses a diverse array of operations. It’s a subjective term that has no singular definition. The government has a definition for tax purposes, health insurance companies have a different set of standards for eligibility, and the general public has its perception of what they consider a small business.
A small business could be a home-based sole proprietor, a privately owned coffee shop, or even a construction company with hundreds of employees grossing millions of dollars each year; it all depends on who you ask. But regardless of the technical definition, one thing is certain: expense tracking matters for any small business.
Five Tips for Small Business Expense Tracking
If you’re running a small business, make sure to do these five things.
Keep all business expenses separate. If you’re a sole proprietorship, keep all your business expenses separate from personal expenses. Open a checking account to use solely for your business; deposit all revenue into that account and pay all your business-related expenses out of that account. If you separate your business transactions into a dedicated account, you’ll automatically have a basic expense tracking record each month: your bank statement.
Automate as much as possible. Small businesses tend to have fewer administrative resources than larger companies. To maximize manpower and focus more resources on things like business development or marketing, automate expense tracking, and other business tasks. A software subscription to log, organize, and invoice your expenses can save your company both time and money over manual methods.
Stay organized. It’s one thing to log your expenses; it’s another to find that referenced receipt when you need it. Stay organized to ensure each expense gets recorded under the appropriate project and line item, and to have quick access to your back-up documentation should you ever need it – like when a client has questions about project costs, or if the IRS comes calling for an audit.
Keep things easy for your employees. You value your employees – so make expense tracking as easy as possible! Be clear about what expenses you expect them to record and what types of reimbursements won’t be approved. Reduce their paperwork burden by using a mobile-friendly platform that allows them to photograph and upload receipts rather than submitting originals, and choose one that integrates with your accounting and payroll systems to speed up the expense reimbursement process.
Evaluate profitability regularly. Managing the bottom line is essential for small businesses. Review your financials regularly to keep tabs on project budgets, operating expenses, and overall profitability. An expense tracking software can even run automated reports, providing accurate figures and visual aids with the click of a button.
Easy Expense Tracking
Make expense tracking easy with MindSalt Time & Expense! MindSalt is trusted by businesses of all sizes for accurate time tracking and expense reporting. The online platform is accessible from anywhere and mobile-friendly so even your most remote employee can stay connected. Sign up for a free 30-day trial today!