Tracking Business Expenses – Tracking Expenses Effectively and Inexpensively
In the beginning, when you are in the research and development stage of your business you do not need a computer accounting system for tracking expenses. You can easily track expenses records with a hand journal entry system. Office Supply stores carry some of the best bookkeeping journals (average cost is $9.99).
For other great information and innovative and neat office gadgets and ways of tracking expenses check out Commission Junction, eBay, Amazon.com, Ezine Articles, Squidoo Articles, and HubPage Articles- just to name a few!
Simple Solutions For Tracking Expenses
But if you don’t want to do that then you can set up a simple tracking expenses system on a computer spreadsheet program instead of running all over town or investing in a system for tracking expenses that you won’t be ready for even in the NEXT four years!
QuickBooks software seems to be the general industry standard for tracking expenses used by most CPA’s and Chartered Accountants in the United States and Canada.
Although there are other software programs available for tracking expenses, I’ve been using QuickBooks since 1999 and find that it works best for most companies small to mid-range in size and up to as many as 40-60 or even more employees efficiently.
Tracking Expenses Example:
Tracking Expenses for your bookkeeping needs–ABC Company
Tracking Expenses Sheet For ABC Company
|Chart of Acct. Item||Amount-Cost||Date||Comments-Notes|
|Home Office||$9.58||M/D/YR||telephone 20%*|
|Home Office||$42.25||M/D/YR||Insurance 20%*|
|Marketing Supplies||$54.97||M/D/YR||Credit Card|
|Auto Insurance||$477.60||M/D/YR||Oct23-Apr 23 Car Ins. Pd.|
Barbie contributing $127.93 per month 2 x to repay 401K loan
Business Expenses Paid from personal $138.47
* Used if you have a home office (tracking Expenses for your home utilities and home phone land line can be deducted according to the percentage of the total square footage of your house percentage – relative to the total square footage of your home business office for business use). Be careful of any rules and regulations for your specific area, for instance common areas used by other household members (hallway to bathroom, for instance) must be deducted or taken into consideration when tracking these expenses. Your chartered accountant or CPA can advise you about the specific rules and regulations in your area.
** Meals can be meetings, . . . But . . .
Tracking Expenses Tip: You need to write down the names of people on your meals or meetings receipt, or that deduction might not be allowed. Tracking meal or meeting expenses this way may be mandatory in your area. Check with your CPA or chartered accountant about the specific rules and regulations in your area.
Tracking Expenses Tip – Be sure to track mileage expenses by carrying a trip log in your car, or go online and have a folder in your office files for internet directions to meetings and clients filed as a precaution. In the event of an audit tracking expenses for auto mileage is the last thing you want to worry about! Internet directions always have a total miles posted somewhere on the directions page which makes tracking expenses for your auto easy!
Use the same accounts consistently and at the end of the month sort and track expenses according to column “A,” ( B.. C..D…) insert an extra line for totals between categories and create a sum for each chart of account category item (meals ..medical..office supplies..) for a monthly total – which you can create a profit and loss statement sheet. Include Sales (Deposits) and list Customers in the, ‘Comments-Notes,’ column.
Most spreadsheets have a “sum” function that will eliminate any hand addition. Please use it to avoid costly mistakes in addition (or subtraction).
WOW THAT WAS EASY! More Tracking Expenses Tips:
If you are switching from a paper system to a computer software system, maintain the hand entry system for the first 1-2 months so that there aren’t problems with the transition from paper to computer software.
Check with your CPA or Chartered Accountant to find out what software they recommend so that the two of you are compatible. Failure to take this step can create tracking expenses and bookkeeping nightmares for you that your CPA or Chartered Accountant will gladly charge you to repair.
When you choose an accounting software make sure you install it on your computer when you are not in a hurry – set it up correctly. Trust me on this one. Going back to ‘fix’ it not only costs you time, money and energy, but in my business, time IS money, so don’t waste it (yours OR mine) by being in a ‘hurry’.
If you are looking for a CPA in your area, the best policy is to get a referral, but if you don’t know anyone to ask, try your local Area Chamber of Commerce. Always interview these people and ask for references.
ALWAYS Get References.
The best way to get ripped off is to use a ‘family friend’, or a professional whose credentials you did not take the time to check out. If you don’t check that, then you get what you deserve. In this case, time really is money – yours (growing wings and flying away).
Tracking Expenses doesn’t have to cost you an arm and a leg, but not tracking expenses can really be expensive!