The Importance of Tracking Business Expenses
While there are many aspects to running a business, let’s take time to focus on just one piece of the puzzle. An important piece- tracking your expenses.
Are you an entrepreneur? Photographer? Hair-stylist? Graphic-designer? Food-truck owner? Whatever your field, you should always be monitoring each and every expense. You may take beautiful photos or serve up the best sandwiches in the food-truck arena, but if you don’t take the time to properly run your business, you could be setting yourself up for failure.
Make it easy on yourself when it comes to tracking expenditures…. keep all of your receipts! Many businesses, especially those run by one or two people typically do not take the time to track their expenses efficiently; however this is a crucial step to monitoring the growth of your business. Taking the time to track your expenses properly throughout the year will aid in the preparation of your tax return and also support what you report on your return.
If you find yourself searching for receipts and printing off your Amazon history when it’s time to file your taxes, you need to establish a system for organizing your receipts and important documents. An easy system is to keep receipts in a large envelope and keep email confirmations in a separate folder. As your business grows you will need to adapt your systems to grow as well. The more organized you are in the beginning the easier it is to access the history should you need it. Holbrook & Manter’s Business Services and Solutions Team can help streamline this process for you.
Take things a step further….make notes on the receipts to explain the business purpose of the expense. Scan and keep your receipts for at least six years (the IRS can come knocking for documentation and audit you up to six years back in some cases). There are several smartphone apps available now to help you retain these records, simply write a note on your receipt, snap a pic and upload it to your chosen app.
Be aware of all of your deductible expenses (and those that aren’t deductible for that matter). There are five types of expenses you should pay extra attention to when saving your receipts:
Meals and Entertainment
Out of town business travel
Vehicle related expenses
Receipts for gifts
Home office receipts
You’ll be thankful you were so diligent when tax time rolls around. Please contact the H&M Business Services and Solutions Team with any questions or for assistance. It’s easy, simply fill out the form below.