There’s no denying that spending tracking and management is very important for any small business. This is made sure that your business is financially healthy to keep cash flow steady and to help you manage your tax season. Knowing how to track business expenses and manage small business expenses is really important for Australian small business owners.
In this article, we’ll review some effective ways of tracking small business expenses and suggest tools that make it simple. Read on to learn more.
1. Keep Business And Personal Finances Separate
One of the simplest ways to track business expenses accurately is to separate your business and personal finances. Opening a dedicated business bank account lets you see where business funds go and help reduce confusion during tax season. It’s also easier to justify expenses as business-related when everything is separate.
Using a business credit card for expenses is also a good idea. It not only helps build your business credit but also organises your spending which makes tracking easier.
2. Use Accounting Software
Today’s accounting software offers powerful solutions for small business owners who want the best way to track business expenses. Accounting software automates expense tracking, providing instant insights into spending and cash flow. It also saves you hours of manual entry.
Popular accounting software options for small businesses in Australia include Xero, MYOB, and QuickBooks. These tools are great for both tracking and managing expense as they come with features such as automatic bank feed integration or expense categorisation and receipt storage.
Also Read: Digital Bookkeeping Guide For Australian Sole Traders
3. Record Expenses Immediately
It’s easy to overlook smaller purchases, but they can add up over time. Develop a habit of recording every expense as soon as it occurs. This simple practice will prevent gaps in your records and keep your finances accurate.
A receipt management app can help you stay on top of this. Most apps let you snap a picture of receipts, categorise them, and save them digitally, allowing you to track expenses as they happen. This habit is one of the most effective ways to manage small business expenses and keep your financial records consistent.
Also Read: Evolution Of Expense Tracking: From Paper To Digital Solutions
4. Organise Expenses by Category
Categorising expenses is essential for understanding where your money is going and making informed business decisions. It is also a key part of business. Office supplies or utilities, travel and marketing are common categories.
Organising expenses by category will help you identify any overspending in specific areas and adjust your budget as needed. This feature is common in most accounting software, allowing you to customise the categories to suit your business needs.
5. Set a Monthly Expense Review
Regularly reviewing your expenses helps you stay on top of your finances and catch any issues before they become bigger problems. Set aside monthly time to review your expenses and compare them against your budget. This process helps identify patterns or cut unnecessary costs and ensure you’re within your financial plan.
A monthly review is also an excellent opportunity for Australian small business owners to check for any tax-deductible expenses and plan for quarterly BAS (Business Activity Statement) submissions if you’re registered for GST.
6. Use A Business Budget
A business budget acts as a roadmap for your finances. It helps you control spending and avoid unnecessary expenses. With a budget, you set limits for different expense categories and aim to stick to them. Budgets are especially useful for startups and small businesses with limited cash flow.
When you track company expenses against your budget, you gain insights into areas that need adjustment. A budget helps prevent overspending and keeps your business on track financially.
7. Monitor Cash Flow Regularly
Cash flow is the lifeblood of any small business. Regularly monitoring cash flow lets you see how much cash is coming in and going out. This practice gives you a clear picture of your business’s financial health.
To track business expense effectively, include cash flow monitoring as part of your routine. This ensures you know of any potential cash shortfalls and can plan accordingly. Cash flow monitoring is especially important for seasonal businesses where income and expenses fluctuate.
8. Keep Track of Employee Expenses
If you have employees, keeping track of their expenses is also crucial. From travel and meals to office supplies, employee expenses need to be documented accurately. Set clear policies and procedures for employees on how to submit expenses. You may also want to set spending limits to control costs.
Many expense tracking apps allow employees to submit expenses digitally which you can review and approve. This setup reduces paperwork and keeps everything organised.
How Sole App Simplifies Expense Tracking for Australian Small Businesses
Managing expenses can be overwhelming, but the Sole App offers an all-in-one solution for Australian sole traders and freelancers. Sole is designed to streamline how to track business expenses and organise finances effortlessly. Here’s how the Sole App can help:
- Effortless Expense Tracking: Sole allows you to record every transaction, ensuring nothing gets missed easily. You can even categorise expenses for better financial clarity.
- Automated Invoicing: Sole App simplifies invoicing and keeps cash flow steady. Automated invoice tracking lets you know when payments are due, which helps keep finances on track.
- Tax Preparation Made Easy: Organise your expenses for tax season and ensure all deductions are accounted for. Sole is designed for Australian tax requirements, making preparing BAS or income tax reports easy.
- No Accounting Knowledge Required: Sole is user-friendly and perfect for those who want to track small business expenses without extensive financial expertise.
Sum Up:
Effectively managing and tracking expenses is essential to running a successful small business in Australia. By using accounting software, creating a budget, categorising expenses and regularly reviewing spending, you’ll gain better control over your finances. Tools like Sole App can simplify the entire process by allowing you to focus more on growing your business and less on managing paperwork.
You can keep your business financially healthy and prepared for future growth with the right tools and practices. Ready to simplify your expense tracking? Download Sole App today and take control of your finances with ease.