Many local banks allow you to open a dedicated business bank account. The best way to accomplish this is by opening a separate bank account. Mixing your business and personal finances will not only lead to confusion, but it can put your personal assets in jeopardy should your business take a downturn. Start by separating your business and personal expenses. The following steps can simplify the process and help you and your company stay organized. You're already juggling multiple responsibilities as a business owner. Tracking business expenses should become a part of your routine as a small business owner, but let's face it: it's not as easy as it sounds. It can also help you determine the return on investment when replacing major items, such as office furniture, electronic devices, or commercial vehicles. Depreciationĭepreciation is a tax-deductible expense, so calculating the depreciation of your major assets can help you save money when filing your business taxes. It's essential to keep track of your interest payments since this will likely represent a significant business expense.īy keeping tabs on your interest payments, you'll be able to see how efficiently your company is utilizing its loans or how much money you're losing through the borrowing portion of your budget. Interest can be fixed or variable, depending on the type of financing that the interest is attached to. They can be fixed (mortgage, rent, certain insurance policies) or variable (utilities, banking fees, etc.). Period expenses come at regular intervals instead of being organized around discrete financial transactions. Fees on your business credit cards are usually classified as variable expenses. They can include business purchases for meals, office supplies, or additional inventory. Variable expenses refer to expenses that don't remain constant. This regularity makes fixed expenses the easiest to track, though they're often more challenging to save money on since they tie to contractual agreements. These fixed expenses usually include your operating expenses, salaries, and rent and mortgage payments. Fixedįixed expenses refer to those expenses that don't change month-to-month. That's why small business owners prefer to place their expenses into specific categories to stay organized. Which of these business expenses do you need to track? All of them. You can classify any money you spend maintaining or growing your business as a business expense, whether it's paying rent, payroll, purchasing new inventory, or the interest paid on a small business loan. What business expenses do I need to track?īusiness expenses cover a broad range of costs. Here's how the pros keep track of their expenses and stay in charge of their companies' financial health. Tracking your expenses will give you a clear, accurate picture of your company's strengths and weaknesses and will save you time (and a headache) during tax season. How has your business been performing this year? If you don't know how to track business expenses properly, you could be facing a gap between how you think your business is doing and the actual health of your company.
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