If you’re making a stash of receipts ready for a final reckoning, or have ‘been there done that’ and wasted hours to totting up receipts in anticipation of your tax return, you need some pointers to put expenses in their place.
Expenses should just be a small trickle of a job, not a big headache. They are considerably easier to manage if you stay on top of them whilst the facts and figures are still fresh in your mind, and while you know where the receipts are!
Here are our top five tips when it comes to managing your expenses.
You know you know it, we know you know it, but we’ll say it again anyway: Being organised is the primary strategy for keeping on top of your accounts. Being organised with expenses is part of that.
This means that receipts should have their permanent, organised home. No back of the wallet stash, no envelope on your desk, no dedicated section in your drawer. Instead, invest in a simple expander box file and pop the receipts in each month. If you’re ever audited, you’ll thank us. Your receipts are evidence – organise them.
Have separate accounts
It’s not unusual, especially as a sole trader, contractor or freelancer, to run the business (and therefore your expenses) from your own personal account. This is especially true in the early days when you’re getting going. However, it makes sense on many levels to have a dedicated business account.
This should be the account in which all business income goes. It will therefore also be the account from which you can make all business-related purchases which can be made by card. It simplifies things and segregates business and personal and makes your bookkeeping easy if you then sync your bank feed to your cloud accounting software. There are many reasons why a business account is sensible and worthwhile, expenses is just one of them.
Diarise the possible
If you have regular and repeat expenses which you can diarise, do. This way you can set up alerts and prompts to log them. The same is true if there is a one-time expense on its way that you know about.
This form of double-checking will ensure you don’t miss anything. This process is really helpful as you can do the legwork of recording an expense when you have the time, rather than wandering around with a receipt whilst your to-do list is otherwise out of control. Furthermore, if you diarise expenses then you can print out a list and check them off against receipts and bank statements.
Get the right software
Expenses only really become a problem when you don’t have the right tools for the job. With the use of a cloud accounting platform, expenses are no longer a hassle, just a straightforward part of your accounting and record keeping.
In many cloud software solutions, such as in Pandle, you can also create categories to manage expenses and feed through to your tax return. With the right software you don’t miss a receipt and you don’t let expense logging become a big deal.
Track and analyse
If you’ve put the above steps in place it’s also really worth tracking and analysing your expenses. Being able to see where your money is going, how regularly and why enables you to get greater visibility in to your business success and understand your profit and loss. Don’t stop at data entry alone, use the data.