7 Tips For Tracking & Managing Expenses

All businesses must manage their expenses well to keep their bottom line growing. The right accounting practices can help you avoid a host of business pitfalls, from tax audits and unnecessary costs to budget overruns and shattered profitability.

But there are so many considerations like software, payroll, taxes, COGS, and more, that finding the most effective and streamlined solution to balance your books isn’t always so obvious.

We’ve compiled a list of ten business accounting tips you can implement today that will help you all year long.

Keep A Record of All Transactions

By recording every transaction across all accounts and financial institutions and maintaining receipts to CYA (Cover your audit), you’ll be able to accurately see where your money is going, what expenses are weighing down your profit margins, and how to make changes that will leave more money in the bank.




Use Accounting Software

Cloud accounting software like Quickbooks, Peachtree, and Freshbooks help reduce labor costs by up to 50% because they automate most of the bookkeeping minutia.




Create financial reports
Store digital receipts
Pay and track 1099 contractors
Reconcile bank statements
Access transaction reporting and analysis
Manage inventory
Have accountant/financial professional collaboration





Identify Business Expenses

Business expenses are anything you spend money on in direct support of maintaining and growing your company. The two primary categories are:




Fixed expenses – Usually the same amount month-to-month
Variable expenses – Fluctuates depending on need, or amount of output





Knowing your fixed and variable expenses will help you better forecast a monthly budget and show you opportunities to cut back or eliminate unnecessary costs.




Discover Cost Savings

Your balance sheet and other financial records are meant to give you a high-level overview of the business. They outline your income and expenses and summarize assets and liabilities. Well-prepared records offer graphs and charts that help pinpoint possible ways to reduce fees and unproductive expenses. Some things to consider might be:




Rate reductions/ negotiating rates
Cutting out low-ROI Business subscriptions
Leveraging contractors over employees
Keeping your business paperless
Leveraging automation wherever possible





According to Paycor, labor is the biggest expense for businesses. Wages, benefits, payroll, and taxes consume up to 70% of the bottom line.




Centralize Expenses to one Credit Card

There are so many advantages to centralizing all of your company expenses to a high-limit business credit card like:




Cashback rewards and/or Travel Miles
Fraud protection and a smaller financial footprint
Consolidated reporting for easier tracking
Improved credit rating for future expansion projects
Purchase protection and extended warranties





Hire a Bookkeeper

Documenting all your expenses ensures nothing gets missed. But properly categorizing them allows for maximum tax deductions and better budget forecasting. So many businesses miscategorize expenses and repayments, which leads to inaccurate reporting.




We believe the best way to maintain accurate records is to hire a professional bookkeeper. It may seem like an unnecessary expense for startups and smaller companies but when every penny counts, make sure an experienced professional is counting your pennies.




A professional bookkeeper can:




Identify all full and partial tax deductions
Ensure every transaction is properly recorded
Accurately update profit and loss statements
Reconcile bank and credit card accounts
Prepare tax supporting documents





Keep Taxes Top of Mind

The more accurate your financial records, the easier and less stressful tax season will be. Especially if you outsource your tax preparation to a business tax professional who can work with you throughout the year. Filing quarterly statements is also best practice because they offer opportunities to pivot and fund as you go instead of getting stuck with a big bill at the end of the year. That’s why hiring a firm like Smith Jeffries, which knows the tax laws and loopholes, can keep you in good standing while minimizing your tax liabilities.




Make Business Expense Tracking Easy.

Smith Jeffries is your financial partner that cuts out the confusion when it comes to business accounting. Our team of dedicated bookkeepers, CPAs, and financial professionals offer you consistent guidance and the confidence to reach your financial goals.



Disclaimer: This article is not, nor should be, considered legal, tax, or business advice of any kind. Always consult with experts (like Smith Jeffries) regarding any and all matters having to do with the financial future of your business.