Master Your Finances: 5 Simple Steps to Track Business Expenses Like a Pro

Let’s be real — tracking business expenses isn’t exactly the most exciting part of running a business. But you know what is exciting? Knowing exactly where your money is going, staying stress-free at tax time and having extra cash to reinvest in your business! The good news is you don’t need a finance degree to stay on top of your expenses. With a few simple habits and the right tools, you can easily track your business spending without the stress. Keep scrolling to learn five simple steps that can help you keep your business finances in check.  

Why is accurate expense tracking important?  

Before we get down to it, let’s review why accurate expense tracking is essential for your business. Correctly tracking your business expenses gives you an insight into your company’s financial health. This snapshot allows you to make more informed decisions and can result in various advantages such as increased tax deductions and financial aid opportunities.  

Step 1: Create Business Accounts  

The first thing you will need to do is create business accounts that are exclusive to your business transactions. This includes a business chequing account, a business savings account and a merchant services account. Creating these separate accounts will make it easier to distinguish between your business transactions and your personal transactions. It is also a good idea to get a dedicated business credit card for your business expenses to avoid issues with receipt sorting.  

Step 2: Choose Your Software  

Once you have your business accounts, the next step is to choose software that can automate your business records and track expenses. You do not need to spend beyond your budget on this software and there are many free or low-cost options available. For example, Wave Accounting and Xero are both great tools for small businesses. If you want to learn more about bookkeeping software and which one would be a good fit for your business, read our previous blog post!  

Step 3: Connect Your Financial Institution 

After your method has been chosen, you need to link your software to your bank accounts. This will allow you to automatically download your bank transactions and categorize your expenses. By automating the process, you can ensure that your expense records are up-to-date and accurate.  

Step 4: File Your Receipts  

Filing your receipts is one of the key factors to accurate expense tracking. Whether it be colour coded folders or scanned copies to online databases, you need to find a method that works for you. It is vital that you keep all receipts for business-related expenses, including operational costs, travel costs, product and services costs, etc.   

Step 5: Review Your Business Expenses  

Expense tracking is an ongoing process, and it is important that you review your records regularly. This involves going over your reports and analyzing the numbers. This will allow you to catch errors or omissions that need to be corrected. Regular reviews also allow you to track trends and stay updated on the financial status of your business.  

So, there you have it! Five simple steps to help you track your business expenses with ease. But we get it, not everyone is a finance fan, and it can be difficult to stay on top of your expenses. If you feel like your financial record tracking is starting to get off-track, there are bookkeeping professionals available to help you. Here at STEPS, we offer small business bookkeeping services and can help you keep your financial documents organized, compliant and stress-free. To learn more, follow the link to our bookkeeping services or send us a message on our contact page.