As a business owner, you already have a lot on your plate. When it comes to your day-to-day operations, it can be easy to assume the business is doing well rather than checking in to make sure. Knowing how to track your business expenses will give you the full picture of your business’ financial health.
Managing your expenses helps you with accurate bookkeeping, which means you can make forecasts, see when you break even, explore number trends, and more. When you know how your business is doing financially, you can make decisions with a deeper understanding of their results. Working with a Denver accounting firm is a great way to get started, but there are some things you can do yourself.
Make Sure You Have a Separate Business Bank Account
After starting a business, you want to be sure your personal funds and business money are kept separately. The best way to do that is by opening a bank account for your business. This keeps all your records organized for tax purposes. While it isn’t a requirement to have a separate business account in all cases, it does make it easier to track expenses and income for taxes. Having a business credit card is another solution to manage business expenses and keep things detached from your personal purchases.
Choose the Appropriate Accounting Method
There are two primary accounting methods: cash basis or accrual basis. A Denver accounting firm can help you decide the right strategy for you. The cash method is the more straightforward option where income is recorded when received, and expenses are noted when payments are made.
With accrual accounting, the process is more complicated and uses a variety of accounting categories. Income and business expenses are recorded when they apply, even if you haven’t received money or made payments. The size of your business can effect which is best for you.
Diligently Track Each of Your Expenses
Once you know how you’ll track money going into and out of your business, make sure you note expenses regularly. This helps you prepare for taxes, build financial statements, monitor business growth, and track deductibles. Even with a new small business, make sure you organize vital records like receipts. All receipts made for the company need to be tracked, which is easier with a business bank account and credit card.
Track Income and Record Expenses
Regularly recording business expenses keeps you aware of where the business stands. Track total income and record expenses regularly, such as once every month. With your recordkeeping method, you can quickly do both of these things to keep your business on track. This lets you adjust things if you notice decreased income. You can cut back on things that aren’t absolutely necessary.
Let the Professionals Step In
If you want to keep things simple, work with a Denver accounting firm to help you manage expenses and keep things on track. Venture CPAs offers a vast assortment of service to help your business succeed. Get in touch with us today to share your needs and see how we can assist you with needed accounting services.