Sometime within the next three months your business will have filed their taxes for 2013. Depending on how well you tracked your company’s expenses, this could be a simple task for your accountant or a giant headache for everyone involved. The last thing you want is to be scrambling around on April 14th to get everything in order to file your taxes. By keeping track of all those expenses, particularly the small and seemingly unimportant ones, you will have less work come this time next year.
What is an Expense?
Chances are you already have a good system in place for tracking payroll, inventory, marketing, and other large and obvious expenses. But what other things do you need to be tracking? The IRS defines a business expense as anything that is “ordinary and necessary” or common and helpful for your business to run smoothly.
What is the Small Stuff?
This can be anything from travel expenses to consultant fees and everyday office supplies, to complicated software. Smaller expenses may seem insignificant at the time but add up fast over a year.
As a small business owner, it will be important to separate your personal finances from your business finances. Sometimes it can seem like these two expenses will overlap. When in doubt, track it anyway and leave the decision up to your accountant. They will be able to tell you exactly what is and is not deductible.
Get Employees in on It
If part of the company’s spending is up to your employees, get them in the habit of tracking what they are purchasing. Get them to keep their receipts to have a hard copy of all purchases. Additionally, encourage them to log their purchases in some sort of tracking software. If you are missing what your employees are buying, you could be missing a large chunk of your expenses.
Use Tracking Software
A lot of software has been developed in recent years to help all kinds of businesses run more smoothly. These programs are designed to help you budget how much you can spend on expenses and then allow you to log the information after you have spent it. Consolidating your information like this will make it easier for you to know what you are spending. It will also give your accountant an easier time come tax season.
Follow a Budget
Having a budget for your expenses not only will keep your spending under control, it can help you to know what you have spent your money on during the year. Very careful trackers can find holes in their expenses if they see a larger or smaller bottom line that might not add up with their allotted budget.
As difficult as it can be sometimes to keep track of every detail of your business, tracking every expense will save you time and money in the long run. Knowing what will be beneficial for your company is the first step in the right direction. From there you can work with your employees (and yourself) to perfect all of your expense tracking.
Theo Schmidt has an interest in computer science and engineering, and he uses that interest to fuel his blogging. For more information on business specific technology, like cleaning software, visit the Service Line Up website.