If you're like most other small business owners, you don't have a huge budget and you probably can't afford to hire a professional to handle the accounting. Instead, you're left with the option of handling it yourself.
The truth is, managing your business expenses doesn't have to be difficult. You can ease the task significantly by trying out these five tips: 1. Record all expenses immediately
Even if you use a software package to track your business expenses, you can only get outputs based on what you have recorded. If you overlook inputting any expenses, you'll end up with the wrong figures, and you'll make the wrong deductions and projections. To avoid such omissions, you must record all expenses as soon as they occur, so you won't have to rack your brain trying to recall them later.
Keeping your financial records up to date not only saves you time in the long haul, it also makes your papers good in case you need to file an insurance claim
. 2. Automate the task as much as possible
Using accounting software such as QuickBooks is another simple way to ease the task of managing your business expenses. With an automated package such as this, you'll be able to accurately track all figures such as sales, utility bills, and mortgage repayments, and ultimately make the right calculations, projections, or decisions.
If you don't know how to use accounting software packages yet, try to learn as soon as possible. Better yet, you can install a mobile app that performs the same role. These are usually much easier to master. 3. Separate business and personal accounts
“Using the same bank or credit card account for both personal and business purposes is a sure recipe for unnecessary complexity, headaches, and regrets,” says Robert Carter, CEO of Your Company Formations Ltd
. “Don’t do it!”
One of my close friends made this mistake some years back. He was trying to repay a car loan at the time. For many months, he ate into his company’s funds while repaying his loan. Unfortunately, he didn't realise this until it was too late that his business had crumbled due to financial crisis.
Because of examples like this, it's highly recommended that you handle your business and personal expenses separately. 4. Keep all receipts
Accounting software and apps are effective and reliable, but nothing is failsafe all the time. Your computer hard disk might suddenly crash. You might forget to record certain expenses. You might need to provide evidence of a transaction. And you might need to double-check each of your expenses.
These are some of the reasons why it’s important to keep all of your receipts — at least for a couple of months. Have a separate drawer in your office dedicated to receipts and group them based on the month you received them. If you have a paper phobia or you just don't have enough storage space, consider using a scanner to create photos of each receipt that can be stored digitally in the cloud
. 5. Monitor your results regularly
The essence of managing your business expenses is to see how you can cut costs as much as possible. So, you need to create both weekly and monthly expense reports and compare your current results with those of the previous period.
This will not only help you to identify areas where you can cut out unnecessary costs, but will also help you to develop accurate budgets based on past expenses.