Teach yourself how to manage your business expenses
Not everyone is a natural bookkeeper. Whether you’re a start-up entrepreneur, a seasoned sole trader or a director of a limited company, keeping on top of your expenses can be one of those pesky jobs that always gets neglected. Are you having to wade through piles of unprocessed receipts more often than you’d like, trying to work out who paid for what and whether you can claim it back through the business?
Maybe all you need is a little help on the organisational front. Let’s walk through the basic steps of how you can record, claim, manage and store your business expenses efficiently and professionally, and without breaking into a nervous sweat.
- What are business expenses?
Business expenses can be claimed whether you’re a freelancer, contractor or small business. These are business costs that you pay for yourself, and for which the business will reimburse you later on. An example would be using your own personal credit card to buy a new computer, or paying cash for a taxi to see a client. They are usually tax deductible against your profits.
The rules on what can be claimed as an allowable business expense can be complex, but it is critical that you know what to account for, how to do it and what you’re entitled to claim back. Here’s a handy guide to business expenses that explains it all in detail.
- Keeping a daily record
The most effective way to record a business expense is as soon as you’ve made a purchase, and while it’s still fresh in your mind. If possible, take a couple of minutes out of your day to record your expenses on the go. Luckily, these days there’s mobile technology available to help you do this, eliminating the need for messy receipt stashing.
One such solution is a clever expense capture solution developed by business process automation experts Document Options. Simple to use anywhere and anytime, it’s tailored to the specific needs of your business. All you have to do is take a photo of the receipt on your smartphone, confirm the amount, select a cost code and upload it to the digital hub for processing. Job done.
- Conducting weekly/monthly reviews
As an entrepreneur, you will be well aware of the fact that it’s not only good practice to keep your finances in order, it’s critical to your survival! Developing healthy habits from the start can go a long way towards knowing where you are with your cashflow.
Good financial management doesn’t have to take up much time; it just needs a disciplined approach. Set aside as little as one hour per week to go through your bookkeeping and notice how much easier it is to stay on top of what’s coming and what’s going out. You can use these weekly and monthly bookkeeping checklists to help you check hat all expenses have been recorded properly.
- Storing receipts online
Did you know that these days there’s no longer any need to keep boxes of hardcopy receipts for the taxman? Instead, HMRC are happy for business owners to store expense receipts in digital format, as long as the record includes both the front and back of any receipts that have information on the back.
The ability to upload receipts to an online accounting system and attaching them to your accounting entries brings additional benefits. Save time and space, easily trace back the receipt to the entry in your accounts and resolve any queries quickly. You are in complete control.