28.2 C
Accra
Tuesday, February 27, 2024

How To Track Your Small Business Expenses To Improve Business Potential Profitability

How To Track Your Small Business Expenses

As a business owner, you must account for and manage several types of expenses in order to keep your operations running. Categorizing these expenses can help you effectively plan your finances, maintain an organized record of all transactions with ease. Understanding the key business expenses categories can also make it easier to identify what is and isn’t tax deductible. Hence, the need to know how to track your small business expenses.

In this article, you will be taken through how to track your small business expenses, how to categorize them and how tracking expenses can benefit your business.

Why You Should Consider Tracking The Expenses

How to track your small business expenses can help you in a number of ways including, business expense tracking helps you identify tax-deductible expenses and gets you better prepared for tax payment. Also, a well-maintained transaction record can come in handy during business audits and inspections.

Again, regularly tracking business expenses can help you determine how you are doing financially, your business’s potential for profitability, and what needs to be changed.
Plus, expense tracking helps you categorize and organize all the financial data essential to keep the business running.
Going forward, tracking business expenses also helps you budget effectively and find external funding if required.
Remember to keep records of business expenses and other business paperwork even after you pay your taxes.

How To Track Your Small Business Expenses

The best way to understand how to track your small business expenses is to create categories for the expenses.
Categorizing business expenses can make it easier to identify deductible items. Below are the main deductible expenses categories for small businesses to keep it noted.

1. Taxes

Business-related tax expenses like state and local sales tax, state and local income tax and property rate may be deductible.

2. Utilities and Rent

Expenses paid for utilities necessary for your business to remain operational can be deductible. These expenses can include your equipments, internet, electricity bills and rent paid for your office and additional storage spaces occupied.
If you work from home and use a home office, you can include the cost of a computer, office chair, work desk and similar expenses.

3. Insurance

The ordinary and necessary cost of insurance can be deducted as a business expense if it is specifically for your business or trade. Instances of deductible insurance expenses include insurance premiums, general and professional liability insurance and commercial property insurance.

4. Vehicle Expenses

If you use a car or a similar vehicle for business purposes, cost of ownership and operations can be deductible. More specifically, the cost of fuel from business use and payment of tolls can be considered deductible expenses.

5. Compensations

The wages you pay your employees or contractors for direct labor can count as a deductible business expense.

How To Categorize Your Small Business Expenses

Categorizing business expenses can be helpful, but it may feel challenging and overwhelming if you have never filed business taxes before. Whether you are a new business owner creating efficient systems for expense tracking, or a seasoned entrepreneur looking to change your financial records system, here are some ways to categorize small business expenses. Consider
Setting up a separate bank account for handling specific business expenses, this can make tracking easier. For example, you can pay all your expenses such as rent, compensations and electricity bills through a separate account for utilities.

Disclaimer

Kindly Join Our WhatsApp Group For More Updates, Thank You!

Read More…

Do You Know? 90 Percent Of Businesses Established In Ghana Yearly Collapses? See Reasons Why Businesses Fail In Ghana

10 Business Management Tips To Grow Your Business Easily

How To Live A Rich Life In Your 20’s – The 4 Sure Ways To Live The Good Life

Thomas Goodmanhttps://www.talkfinance24.com
Thomas Goodman is a Degree Holder, a prolific Personal Finance writer and Expert. His work has been recognized by Millions of people round the world and the United States precisely. He has since over a decade, helped people to manage and gain full control over their finances through his adequate and concrete write-ups. His Goal is to inform and educate people worldwide on Personal Finance, Budgeting, Banking and Finance, Career Planning and Savings. He loves to Educate people to attain their financial freedom. Reach out to Him personally on [email protected]

Related Articles

Health Insurance Benefits: 10 Companies That Offer Health Insurance For Part-Time Employees

10 Companies That Offer Health Insurance For Part-Time Employees Are you a Part-time Employee looking for companies that offer health insurance for part-time employees? Well,...

Rental Car Insurance: When And How To Use American Express Rental Car Insurance

How To Use American Express Rental Car Insurance Are you looking for how to use American Express Rental Car insurance? This article focuses exactly on...

Best Insurance Options For Job Loss: 6 Insurance Options That Can Help You Manage Job Loss

Best Insurance For Job Loss: 6 Insurance Options That Can Help You Manage Job Loss Facing an unexpected job loss is undoubtedly one of life's...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Stay Connected

0FansLike
2,815FollowersFollow
0SubscribersSubscribe
- Advertisement -

Latest Articles

Health Insurance Benefits: 10 Companies That Offer Health Insurance For Part-Time Employees

10 Companies That Offer Health Insurance For Part-Time Employees Are you a Part-time Employee looking for companies that offer health insurance for part-time employees? Well,...

Rental Car Insurance: When And How To Use American Express Rental Car Insurance

How To Use American Express Rental Car Insurance Are you looking for how to use American Express Rental Car insurance? This article focuses exactly on...

Best Insurance Options For Job Loss: 6 Insurance Options That Can Help You Manage Job Loss

Best Insurance For Job Loss: 6 Insurance Options That Can Help You Manage Job Loss Facing an unexpected job loss is undoubtedly one of life's...

Life Insurance Insights: Understanding The Difference Between Term Life And Whole Life Insurance Policy For Informed Financial Choices

Understanding The Difference Between Term Life And Whole Life Insurance Policy People often want to know that their family’s financial needs will be met in...

25 Best Money Making Apps That Pay Through Mobile Money In Ghana

Best Money Making Apps That Pay Through Mobile Money In Ghana Welcome to the digital realm where opportunity meets innovation! In the vibrant landscape of...