How Do You Track Small Business Income and Expenses?
As a small business, you need to have a full and complete understanding of both your income and expenses.
That’s why tracking both is pivotal. It helps you stay organized, keeps you prepared for tax season, and builds on your success with a clear and methodical approach to handling your finances. In general, it helps you stay on top of your business.
From this article, you’ll find out:
- The key steps to tracking income and expenses
- How important it is to keep tracking
- Tools you can use to start tracking today
Tracking Income and Expenses 101
At its most basic level, tracking your income and expenses on a regular basis helps you stay up-to-date with your financial information. Instead of guessing or hoping for the best, you can instead understand exactly where you’re at – at all times.
A huge part of that is doing the basics:
- Opening up a business bank account
- Selecting your preferred account method
- Getting to work!
Let’s think about it like this. If you begin by tracking your income, you gain a better idea of the overall effectiveness of your products and services for your base of clients. You can see how much you are making, how quickly it is growing, and what you can do to help it improve.
At the same time, tracking expenses shows you how much you spend and on what items you purchased. It allows you to see the expenses you need to make to keep your business running, and potentially where you can decrease those expenses to run more efficiently.
The Importance of Tracking
Perhaps you’re thinking, “I already keep track of my expenses, so why do I have to work harder at it?” The truth is that you may be tracking your expenses, but you might not be doing it in an effective manner.
Consider how you track your income and expenses. All they are lumped together? Do you treat them separately without understanding how one affects the other? Have you considered breaking down your expenses to make changes?
Accounting can be a challenge for a lot of small business owners, simply because they are not used to doing it. Numbers can be intimidating, and you may not want to deal with them in fear that you’ll screw something up.
That said, the importance of a deep dive into your finances is obvious – it can help:
- Determine when expenses are too high
- Evaluate your income streams and how money comes in
- Define areas of improvement
- Take advantage of key periods of growth
Building on that, tracking your expenses specifically can help:
- Monitor the stability of your business
- Prepare accurate financial statements
- Stay on top of deductibles
- Confidently prepare for tax season
What Kind of Expenses Exist?
When we think about expenses, we think about making tax deductions. This is possible on things like your phone, transportation, or entertainment.
If you have a good handle on any of these, you can save your business money come tax time.
There are different kinds of expenses, though, so let’s break them down:
- Accrued Expense – This includes things like rent, heat, salaries, and some taxes.
- Convention Expense – The kinds of expenses that you incur while at a convention. This could include entry costs, booth fees, transportation, and more.
- Expense Record – This is a list of all the expenses that your business has during a specific period of time.
- Indirect Costs – If your business had expenses that didn’t relate to a specific project, they would go here. It might include internet, office supplies, and more.
So, how do you do it all?
How do you stay organized, track your income and expenses, and stay on top of what matters most to you? If you care about the health of your business, you need to get on Board.
Board’s Tracking Solutions
Board is an application developed specifically for small business owners to take control of their finances, while making smart decisions with them.
Part of that involves performance reporting. With Board, you can have your key performance indicators at a glance, dive deep into your financial results, create a unique dashboard specific to your business, and choose from loads of charts and reports.
At the same time, you can also build budgets to keep better track of your expenses. This way, you can ensure that you never go over, and you can forecast into the future how your expenses might look during months that your income is lower.
Overall, this can help you make critical business decisions to reduce expenses, improve profitability, and drive growth for your small business.
Even more importantly, you can plan and track exactly where your money goes. That includes your income, your expenses, and even your receipts. They can all be stored on Board, where you can take a picture, scan an invoice, and keep track of everything with handy labels that categorize your expenses and your income.
It’s a solution that is designed to work for you. When you have the chance to track small business income and expenses, you can focus more on making decisions to grow your business (and not simply just to survive).
Thinking About Board?
We’d love to help you get started. Using Board, you can:
- Plan and track where your money goes
- Know when to spend more (and less)
- Start with simple budgets that work for you
In general, Board can help you plan, understand, and make smarter decisions with your business’ finances. You can even divide it amongst accounts to make it work for you.