10 Most Common Expenses Small Business Owners Forget to Claim
Discover the 10 most commonly overlooked business expenses that could...
Efficient expense tracking is key to maximising your tax savings and maintaining business control.
Proper expense tracking ensures that no deduction is missed and your business stays compliant. In this guide, we’ll walk through the best methods and tools available to help you track your business expenses, so you can save time, reduce your tax bill, and stay on top of your finances.
Why Accurate Expense Tracking is Essential
Accurate expense tracking goes far beyond keeping the taxman happy. It gives you clear insights into your spending habits, helps you identify areas to cut costs, and ensures you claim every tax-deductible expense available to you.
Best Methods for Tracking Business Expenses
1. Categorising Expenses
Break your expenses down into categories like office supplies, marketing, employee wages, and travel. Categorisation helps you stay organised and makes claiming expenses much easier.
Example:
Create a simple Excel sheet with columns for category, date, amount, and vendor.
2. Using Cloud Accounting Software
Cloud accounting software like Xero or QuickBooks is a powerful way to automatically track your income and expenses. These tools sync with your bank account and let you categorise expenses with minimal effort.
Tip:
You can set up recurring expenses for bills or subscriptions so that they are tracked automatically.
3. Setting Up an Expense Tracking System
Whether it’s a basic spreadsheet or an accounting tool, a good system makes expense tracking more manageable. Aim to log expenses as soon as they occur.
Tip:
Set aside a fixed day each week to input receipts and verify expenses.
4. Keeping Digital Receipts
Instead of holding onto paper receipts, use apps like Expensify or Receipt Bank to scan and store receipts digitally. This saves time and prevents lost receipts.
Example:
Every time you receive a receipt, snap a photo and upload it to your digital expense manager.
5. Implementing Expense Approval Processes
For businesses with employees, it’s crucial to have an approval system in place for all expenses. Set policies that ensure only business-related purchases are approved, reducing errors and fraud.
Top Tools and Software for Expense Tracking
1. QuickBooks
QuickBooks is a leading accounting software that helps business owners track income, expenses, and VAT. The software also generates tax reports and helps with financial forecasting.
Key Features:
- Automatic bank feeds
- Invoice generation
- VAT reporting
2. Xero
Xero is a cloud-based accounting platform designed for small businesses. It offers expense tracking, bank reconciliation, and payroll processing, all in one place.
Key Features:
- Real-time collaboration
- Smart categorisation of expenses
- Mobile app for on-the-go tracking
3. Expensify
Expensify is a receipt scanning app that simplifies the expense reporting process for businesses. It automatically imports credit card transactions and lets users categorise and manage expenses in real time.
Key Features:
- Automatic receipt scanning
- Expense categorisation
Reporting and approval workflow
4. Receipt Bank
Receipt Bank is a powerful tool for digital receipt management. It helps you capture and categorise receipts on the go, and integrates seamlessly with accounting software like Xero and QuickBooks.
Key Features:
- Instant receipt scanning
- Integration with accounting platforms
- Smart data extraction
Tips for Organising Your Business Expenses
- Store receipts digitally: Use apps like Expensify or Receipt Bank to keep your receipts organised and avoid paper clutter.
- Categorise regularly: Don’t wait until the end of the month to categorise your expenses. Try to keep up weekly to prevent overwhelming tasks.
- Monitor subscriptions: Subscriptions for software, memberships, and online tools can add up. Regularly review them and cancel unused services.
Common Expense Tracking Mistakes to Avoid
- Mixing personal and business expenses
Avoid mixing your personal spending with business expenses to prevent confusion. - Failing to record expenses promptly
Failing to record expenses as they happen can lead to missed claims and errors. - Not keeping proper receipts
Always keep records of your expenses, including receipts and invoices, for at least 6 years. - Neglecting recurring subscriptions
Subscriptions like software, websites, and memberships are easy to forget but are often tax-deductible.
FAQs
1. Do I need to track every penny spent on my business?
Yes, it’s important to track all business expenses, no matter how small. Every little bit adds up!
2. How often should I review my expenses?
It’s a good habit to review and categorise expenses at least once a week to stay on top of your finances.
3. Can I use personal software for business expenses?
While you can use personal software, investing in business-focused expense tracking tools like QuickBooks or Xero is a much better long-term solution.
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