Economic hardships have forced a lot of business to take a good hard look at their finances. Tightening the belt means evaluating your costs and deciding what to eliminate.
The first step is to take a look at all of your expenditures and decide what is wasteful and what isn’t.
This can be a very difficult task if you are just relying upon your monthly business credit card statement because this credit card statement can only give you a glimpse at your expenditures, and not tell you why you’re spending your money the way you are.
That’s why expense management is a key organizational tool businesses of any size must possess and master.
Here are three things you must do in order to properly manage you and your company’s expenses
1) Collect your Receipts
Prepare to be audited! You should have digital copies of every one of your expenditures over $75. If you’re being audited by the IRS or a potential acquirer it’ll help to show exactly what you’ve been spending your money on.
Proper organization is a sign of a well-tuned business, and expense management is a great indicator toward your financial ineptitude.
2) Track your Mileage
Everyone knows that at the age of 14, Warren Buffet was a newspaper delivery boy and wrote of his bicycle on his tax return. If he wrote off his transportation costs as a business expense when he was pre-teen, why aren’t you doing it now?!
For 2010 you can write of $0.50 for every mile you drive related to work. If you drive 40 miles for work every single day, that’s $20 PER DAY you can write off. Total that up over the course of a year and you’re looking at writing off $5200, just for driving to work! Keep track of your mileage and save this cash!
3) Keep your Books Up to Date
If your books aren’t up to date, then you’re spending money you don’t know you have. Make sure as soon as you have your expense report, that it’s immediately transferred to your balance sheet, so you know how much money you’ve spent, and more importantly, what you’ve spent it on. Blindly spending is a dangerous habit that no successful business gets used to.
If you follow these three steps for mobile expense tracking, you’ll be better prepared for an audit as well as have a greater understanding of where your money is going and why.
As for systems, there’s a lot out there but I would suggest looking at mobile expense tracking solutions such as ProOnGo Expense because of the distinct advantage of portability. If like most of us, you carry you smart phone with you wherever you go, than it’s a snap to record your expense to your books as soon as you spend the money.
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