Did you know that only half of all small businesses survive their first five years? There can be a lot of different reasons why a business ends up failing.
However, one of the more common ones is that they don’t take full advantage of expense reporting for tax season. Business expenses refer to any costs that come with running a business.
When tax season rolls around, you can subtract these expenses from your taxable income. The challenge comes with keeping track of them.
That’s why in this article, we’ll walk you through how to keep track of expenses and profit or small business. Let’s get started.
Get a Business Account
You don’t want a business account where the finances are mixed with your own personal ones. So if you haven’t already, create a separate account that’s exclusively for your business transactions.
This will include both a checking and savings account, as well as a merchant services account. It’s also a good idea to get a business credit card.
That way, all your receipts are in one area. If you need a good option, make sure to check out this resource here (https://www.nav.com/business-credit-cards/).
Find Accounting Software and Link It
The key to making business expense tracking is to find a good piece of accounting software that can automate the entire process. We recommend investing in an option that gives you year-end insights into how your small business is doing.
But don’t worry if you’re on a budget. There are still plenty of good free small business expense tracking options to choose from.
Once you find the accounting software, you can then link it to the business account you started in the last section. That way, any bank statements you have are automatically imported.
File Your Receipts
Once you file your taxes, don’t get rid of your physical receipts. Instead, file these receipts away for at least three years after you file taxes. Once that amount of time passes, then you can get rid of them.
Organizing these receipts based on their function or data can make accessing them a lot easier down the line.
Review Any Expenses
It’s important to take the time to review your business expenses. You never know when there might be an accidental omission or a mistake.
Reviewing can help you catch these. It can also help you find trends in areas that you might be overspending in as a business. Make sure you take what you learn from these trends and apply them to your business.
Appreciate Learning How to Track Expenses for Small Business? Keep Exploring
We hope this guide helps you learn how to track expenses for small business. Remember that keeping track of business expenses and income doesn’t just help you during tax season.
It can also be a valuable way to gain insights into the current state of your business’s financial health. So if you’re not already, make sure you start tracking today.
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