Expense tracking is an important part of creating a budget for your small business. Keeping a daily record of your expenses by tracking receipts, invoices and other outgoing expenses improves the financial health of your budget. Tracking expenses can help you stay on top of your cash flow and prepare you for tax season.

How Can Expense Tracking Benefit Your Business?

1) TRACKING YOUR EXPENSES MAKES YOU A BETTER MONEY MANAGER

A lack of cash flow can cause your business to fail.

As a business owner, staying on top of your monthly budget is crucial to your success. There is no better way to manage your budget and know where your money is going than expense tracking.

Recording your expenses daily can ensure that you are financially aware all year long and not just during tax season. Knowing where your money is going and how much you’re spending can improve your spending habits. Plus, you’ll have a better idea of where you can allocate money to positively impact your bottom line.

2) EXPENSE TRACKING PREPARES YOU FOR TAX SEASON

Tax season is a stressful time for everyone, especially business owners.

Keeping a daily record of your expenses will help you avoid digging through shoe boxes, your car and pockets for receipts. Knowing what expenses are tax deductible can make sure you’re not losing out on any money.

Deductible expenses include:

• Business meals
• Telephone and internet expenses
• Travel expenses to attend client meetings
• Office supplies
• Bank fees and interest
• Education
• Home office expenses
• And a whole lot more. 

3) GIVE YOUR EMPLOYEES MONEY BACK WITH EXPENSE TRACKING

Small business employees spend money on travel expenses, meals and other purposes associated with business operations.

Having a best practice for expense tracking and reporting employee spending will help business owners efficiently reimburse their employees in a timely manner. Expense tracking gives you a better idea of your business’ operation costs. Plus, you’ll keep your team happy by reimbursing them their money.

4) EXPENSE TRACKING MAKES BUSINESS FORECASTING EASIER

When you track your expenses, it is much easier to calculate the profitability of your business. The equation is simple: revenue minus expenses.

You can offer potential investors a better idea of your company’s profitability by offering them a better idea of how your business is doing. You don’t have to make an educated guess about your finances when you’re tracking your expenses. With up-to-date expense tracking, you can offer stakeholders a clear picture of your business forecast and strategy.

                                                                                    ------FreshBooks.com