How to Track Monthly Business Expenses

Although it may take some extra time and a lot of organization, it is vital to track monthly business expenses to be certain you are not spending more than you are making. The last thing anyone wants to do is lose money while working endless hours starting a new business. Tracking monthly expenses can also help you see clearly where you may be able to reduce expenses and improve your bottom line profits. There are many different ways to track monthly expenses.

Instructions

1. Keep a detailed Excel spreadsheet of expenses. Excel is a versatile program and comes with many software packages and some computer systems. Another nice feature of Excel is that you can punch in a column of numbers and have the program add up the sum automatically. This means, you can track both expenses and income for an overall bottom line for the month. Quickly see whether you are in the black or in the red for that month.

2. Use expense tracking software, like Quicken, QuickBooks or Peachtree. All three programs allow you separate items into categories, so you can track exactly where your money is going. Categories might include automobile mileage costs, office supplies and even advertising. This will allow you see at a quick glance any areas where you might improve and cut costs.

3. Keep a hard copy ledger. In today's technology driven world, keeping a handwritten ledger may seem old-fashioned. However, it is a viable way to track income and expenses and some people prefer the precision of written numbers as typos and other mistakes can greatly impact computer programs. A hard copy ledger can be vital in the case of a major computer crash as well.

4. Keep receipts! As you track your monthly business expenses--especially if you are tracking them for tax purposes--be sure to keep any receipts. If you want to track the expense of mileage to drive down to the local office supply store and pick up printing paper, you'll want to keep the receipt where you stopped to get gas or deposited customer checks at the bank. This isn't something you can specifically take off on your taxes, but it serves as proof that you were where you said you were during that time. To go even further and prove that it was a legitimate, business-only trip, you may also want to reference the receipt where you purchased the paper itself to show you specifically went to the office supply store.

Tips & Warnings

• Record expenses immediately. Don't let this work back up on you as it may quickly become overwhelming!

References

• "Accounting and Recordkeeping Made Easy for the Self-Employed"; by Jack Fox; 1994