Managing a company, a small business, or any endeavor involves accurate data processing daily. Any violation of this policy results in unappreciated performances by the members of staff and the organization. As a result, keeping track of business spending is essential in running a business, so you cannot afford to neglect it. While there are many ways to track the expenses of a business, you must develop an effective system if you want to manage your company effectively, keep track of spending, and guarantee that they are appropriately accounted for.
In microfinance firms or financial institutions, for example, there are a lot of instances where expenses need to be monitored, especially when compiling a list of personal fast loans issued or a balanced record of credit vs. debit. In this case, it is preferable to trust the use of artificial intelligence tech, such as expense monitoring tools, to eliminate human mistakes, relieve stress, and maintain efficient workflow. These strategic tools provide a new experience while monitoring all future expenditures the employees will incur. Additionally, they enable you to keep track of information on the team member’s prompt reimbursements inside and outside the business.
Making a record of your money’s journey to every destination is called expense tracking. Receipt sorting is not enjoyable. However, the ideal expense tracker speeds up the procedure and aids in keeping track of your company’s financial health. This article reveals the top expense-tracking tools for small businesses, their importance, and the considerations to bear when hunting for the right tool.
What are Business Expenses?
Any cost associated with your firm is regarded as a business expense. Expenses include rent, utilities, furniture, inventory, equipment, permits, insurance, marketing, and employee salaries. Others fall into categories of:
- Travel budgets
- Bank charges
- Subscriptions
- Community dues
- Consulting fees
- Deliveries and supplies
- Medical bills
- Contracts and certification.
While these are among the most typical types of business debts, you can still classify any transaction connected to your company as a valid business expense.
Why Should You Track Your Small Business Expenses?
Imagine you went shopping over the weekend with your friends. You realize at the end that you have made unwanted purchases. You only did it out of pure peer pressure. Instead, it could have been beneficial to invest the cash in yourself by getting a personal development book or signing up for a hobby class.
The ability to track spending is vital for small and medium-sized business owners. Additionally, since a firm is an autonomous entity, it is vital to keep personal costs apart from corporate ones. It is the primary step to applying more complex accounting techniques, which could aid your company’s growth and keep track of your spending.
Regardless, it would be fantastic if you treated your business as though it were passion because there are significant benefits attached to being a brand entrepreneur. You probably need more convincing so here are some reasons you should track your small business finances:
1. For Insurance Purposes:
You, as an individual, may not be entitled to the legal protection your company is entitled to. If your expenditures are not appropriately arranged, you go against those agreements and could be held liable if a client files a lawsuit. Your assets could be at risk in such situations, so it’s best to prepare with insurance that oversees your expenses.
2. To Handle Tax Matters Effectively:
You’re more likely to submit an honest tax return fee if you keep accurate records of your expense activities. Additionally, if the IRS audits you, it won’t be challenging to present them with thorough proof of your spending.
3. For Fund Separation:
You won’t need to search your car’s dashboard or cabinet for receipts and bills or spend years wondering if a $10 ticket was for a date or a client meeting. Additionally, you are entitled to a specific level of reimbursement for expenditures paid when traveling outside the city for business meetings. Some expenses related to business can be written off as non-taxable business meeting expenses. It will also be simpler for your bookkeepers to differentiate between taxable and non-taxable items.
4. Profit Evaluation Becomes Easier:
The ability to accurately call exact net profit figures in ratios or numbers without speculating is an admirable feature of a balanced system. By considering expense tracking, there is a reflection of growth in the proper budgeting of the company finances in the long run.
How to Track Business Expenses for StartUps?
Although there are techniques to manage expenses manually, doing so is only advised if you have a few business expenses to track.
Using small business expense management systems is the ideal way to track your company’s expenses. They make records much simpler to keep track of, classify them correctly, and have no restrictions on current financial data. This is significant since you’ll want to claim your allowable expense deductions for the tax season. However, these are other steps to take:
- Open A Business Account Under The Registered Company’s Name
- Make Use Of Spreadsheets For In-House Accounts
- Implement Instant Cash Accounting
- Connect Your Financial Institutions to Your Preferred Accounting Software
- Keep Track Of All Receipts And Digitize Them
- Always Record Expenses Immediately And Categorize Them
- Choose A Company-Specified Expense Application.
As you can see, there are several methods — both manually and automated by using accounting software — through which you can take good notes of your spending. If the latter is your choice, there are excellent recommendations for you.
5 Expense Tracking Tools Every Small Business Should Utilize
Utilizing business spending tracker applications is one method of keeping track of business spending. By tracking receipts and bills, an expenditure tracker app enables you to keep an accurate and timely record of your spending.
Some programs skip tedious work and connect instantly to your bank transaction accounts to save time. Now let’s quickly examine some of the top business cost-monitoring tools.
1. Expensify
Expensify is a smart app that will help you stay abreast of the inflow and expenditure of resources in your small business. With this app, you can take pictures of receipts and invoices on the go. If your business activities require that you travel regularly, this app might be a great choice as it allows you to cover expenses while moving. The good news is; it is also compatible with Android and iOS devices.
This popular mobile tool automatically interprets receipts when you snap a picture of them and converts them into documented expenses. You can also categorize your expenses into travel, logistics, and food. The best part is that Expensify costs nothing for individuals and $5 per month for teams.
2. FreshBooks
FreshBooks lets you quickly enter your expenditures on your desktop or smartphone through the designated app to avoid spreadsheet-associated problems. As a user, you only need to balance the transactions and upload images of your receipts because it automatically pulls in the latest purchases from your bank account and credit card daily.
Thanks to its effortless design and transparent reporting, you can quickly identify where lapses and gains stand. Their cheapest subscription, which includes five clients and one user, is $7.50 per month. But if you run a start-up, we advise you to choose the $25 monthly plan.
3. Concur
An AI-driven technology called Concur Expense enables quick analysis of all the charges by connecting your financial data to your accounting department. The best perk of this digital tool is that multiple currency inputs can be processed quickly with this program because it is highly computerized and has a worldwide interface.
Only current Concur clients are eligible to download the free iOS and Android apps. But, on their official website, potential consumers can quickly request a quote for use.
4. Certify
Certify provides some excellent insights into spending management. Making reports, managing them, and processing reimbursements are all made simple with this program. Given that it supports over 60 nationalities and 140 different currencies, it is ideally suited for international trade.
With the software, you can combine your corporate cards and insurance policies and customize each item based on your spending limit. For ease of use, the product also integrates with other programs like Oracle, Microsoft, Uber, QuickBooks, etc. All devices can use the app, which performs well and receives high user ratings.
5. QuickBooks
QuickBooks has many more capabilities than the other spending trackers on this list. Breaking things down, there are features for automating all tax payments, tracking invoices and spending, taking online payments, and running payroll.
Making anything work also takes the most expertise, time, and effort. That’s why you need to manage all of your finances with QuickBooks. QuickBooks Self-Employed, which costs $7.50 a month and works with iOS and Android devices, is incredibly feature-rich. Then, for $12 a month, you can combine it with TurboTax.
How To Choose the Best Expense Tools?
When considering choosing the right expense tool for your start-up, there are certain things to consider. Here are the essentials to grade and review.
- Ability To Process Multiple Currencies
Expense management software should always feature multiple currency settings to ensure that activities may be completed even when staff is abroad.
- User Friendliness
Tools for managing expenses must be easy to use and effective. Only in this fashion will using this app for staff communication be beneficial. The features should keep your data private and secure when tracking your expenses and prevent any chance of security breaches on their platform.
- Device Compatibility
Both desktop and mobile users should be able to use the management application. Using both smartphones and desktop devices to access the app anytime gives the staff control.
FAQs
1. What are Expense Tracking Tools Used for?
Simply put, expense tracking software saves the stress of manual receipt entry and automates management’s ability to monitor team member spending and keep tabs on business expenditures.
2. How Much Do They Cost?
The cost of expense tracking software might vary based on your company’s size, reporting complexities, department organization, categories, and functions. Their range goes from $5 to $25 based on how their usefulness varies.
3. How Can I Choose the Best Tool for My Business?
Mesh payments, Concur expense, Expensify, and Certify are a few top expenditure management programs to consider. There are others, but preference and reviews play a significant part. You can work productively with these tools with excellent results.
4. Are There Other Ways of Managing Expenses?
The old approaches to managing expenses involved staff collecting invoices and receipts, which were then transferred to the accounting department for recording using sheets. You might consider this, but it is time-consuming and not as effective as modern tracking tools.
Conclusion
A spending management tool is advised to enable simple accounting and management of business-related expenses, including staff trips and labor costs. This way, your start-up business can spend less on unnecessary expenses and more on things necessary for the enterprise’s growth.
