Keeping Track of Your Business Expenses

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Keeping Track of Your Business Expenses

Just as with our article on Budgeting, it’s important to be aware of, and record the expenses that are incurred while running your business. No matter what sort of business you’re running, you will have costs, and it’s important to be aware of these at all times, to avoid running into a situation where forgotten expenses suddenly come due.

Our expenses guide leaves a lot of leeway as to how you actually track these expenses – it can be used by any business owner, regardless of their operation style. Digital, pen and paper, this process works for everybody! The most important thing is to develop a system for tracking – we’ll show you how to do that here.

Your Expenses Medium

Some people love the advantages that digital records bring – they’re easy to copy, print, and send to others. Expenses tracking software is easy to find, and a number of really great free options exist for those who are budget-conscious. Another advantage of storing your expenses digitally is that this information can be more easily integrated into a digital budget, saving time for you as a business owner.

However, digital options aren’t for everybody; if you’re less likely to consistently use a software option, then it is best to record your expenses manually in an old-fashioned way: pen and paper.

Handwritten expense tracking is still popular for a reason: it works! It’s simple, straightforward, and infinitely flexible. If this is how you operate best, then go this route! The way in which you track your expenses isn’t the most important factor – instead, what’s important is that you actually do it.

Track Every Expense

You should record every expense you take on for your business, and input it into your expense records, as soon as possible. If that means you take some time every day to input records, that’s great! Falling behind on expense records risks not doing it at all – which means that you’re less likely to know what your business’ financial standing is in the long-term. As well, you’ll probably find areas where you can save money (“$150 on bubble wrap?!”) Spend the time on expense tracking – it pays silent dividends!

Winners and Losers

If you’re selling different types of products, you might be surprised to see how much of a difference in profitability there is between different types of products. For example, you might be selling only a few of Item A, and tons of Item B. But if the expenses involved in Item B are getting out of control, you’ll find that you’re not making as much money as you could – you could even be losing money each time you sell your more popular item! By tracking your expenses, you can actually know which items are ‘winners’ for your business, and which need to be adjusted in price and cost.

Growth

Tracking expenses allows you to plan for future growth, because you’ll know which item categories are most profitable. Consequently, you can plan an expansion into these categories, maximising the profit for your business. Businesses grow by being profitable – and in order to profit, you need to know how much you’re spending. Expense tracking is an important tool for getting there.

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