Small business owners often wear many hats from head chef to chief bottle washer and everything in between. Bookkeeping is one of those many hats and one of the most important. Tracking accounts receivable and accounts payable are fairly simple but what about tracking all those varied and random expenses?
Create a filing system for receipts based on your expense accounts. Avoid using miscellaneous as a catchall account. Miscellaneous expenses should be rarely or singly occurring events.
Create a filing system for paid bills, bank statements, and credit card statements.
Keep a ledger to track petty cash and any loans made by the business.
Tax filings and payroll expenses should be tracked separately.
Keep a notebook in your car to track your mileage and auto expenses. Another option is to use a mileage tracking app on your smartphone.
Review your expenses on a monthly basis along with payables and receivables to make sure your business is running in the black.
Whether you’re more comfortable using paper systems or using technology to track expenses, of all the filing systems you decide to use, the most effective ones will be the ones you use consistently. You don’t want to be trying to sort out a massive pile of receipts two weeks before the tax deadline.