Almost 20 percent of all new businesses fail within their first year. One reason why? They don’t keep track of their finances very well and run out of money.
Many new businesses fail to effectively track and manage their expenses. And before long, they are closing up shop and fail to ever reach their successful vision for their new business.
You can avoid this if you know how to effectively track your business expenses.
Here are 5 easy steps you can take on how to track business expenses.
- Develop a Comprehensive Budget
The first step in tracking expenses is to create a budget. You need to be able to know where your money is going, how much is coming in, and what categories you are spending money on.
If you do not have a budget, you will lose track of all the little expenses you make and be more likely to run into problems around tax season.
- Have a Good Relationship with Your Accountant
If you don’t already have an accountant, you need to get one. Your accountant can be your advocate on how to get special tax advantages and breaks, saving you a ton of money over time.
- Get a Spend Management Software Platform
The easiest way to track your business’s expenses is to have an intuitive software platform do it for you. Software solutions like Bentoforbusiness.com are intuitive business spend management programs that can save you money by tracking and preventing unnecessary spending.
- Have a Place to Store Paper Receipts
While a lot of business purchases are made online with digital receipts, a lot of small business owners make business expenses in stores and in person. Whether you are picking up office supplies or having a business lunch out, it is important you keep track of those paper receipts.
With the spend management software mentioned above, you can take pictures of your paper receipts and often upload them directly into the software. It will then automatically sort and categorize them, allowing you to easily track these expenses.
- Make Sure You’re Using the Proper Business Bank Accounts
Another common mistake to avoid is simple. Open up a proper business bank account and get a business credit card to make all your business purchases.
If you make some business expenses on a personal credit card or use your personal bank account, it could cause major confusion come tax season. Avoid this and use the proper accounts so everything is in one place.
Want More Advice on How to Track Business Expenses Easily?
Knowing how to track business expenses effectively can be the deciding factor on whether or not your business fails or succeeds. Follow the five steps mentioned above and you will have a much higher likelihood to be successful beyond the first year.
If you are looking for more advice on how to track business expenses, how to create a business budget, and more, be sure to check out more blogs on our website.