How to Track Home Business Expenses
Keeping accurate track of home business expenses is critical if you plan to itemize deductions. Not only will accurate record-keeping help you to be able to claim all the deductions you are entitled to, but it will also help you be prepared, should you be audited by the IRS. This article will give you some simple tips for tracking home business expenses for the small business.
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Things You'll Need
- Record book
- Microsoft Excel or Quicken
- File cabinet and file folders
- Travel log
Instructions
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Record every expenditure in a logbook, initially. As receipts come in, write the amount of the receipt and what the purchase was for in a record book or log book.
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File away your receipts in your filing system, by month and then sub-filed by expense type. This will help you find them later, should you need to retrieve the receipt at a later date.
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Transfer recordings from your written log book once a month into Excel or Quicken. This way, you will have a written copy, your receipts and your electronic copy. This may seem like overkill, but in the event of an audit, you will be glad you kept such accurate records.
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Keep track of your mileage. Most office stores sell mileage booklets in which you can write the mileage driven. Record how far you drove and what the travel was for in the mileage book. Then, once a month, transfer this information into your Excel spreadsheet or Quicken, as well.
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Keep track of travel expenses. If you travel by plane, stay in a hotel and eat at restaurants for your business, you will want to keep track of all of these expenditures, as well. After each travel event, file your receipts, record expenses in your log book and enter them into your Excel spreadsheet or Quicken. Again, this "triple record" system will help you in the event of an audit.
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Tips & Warnings
Don't try to cheat on your taxes. The IRS looks closely at deductions from home offices and small businesses.
