Tracking business expenses when self employed it vital to ensure you’re not over paying on your taxes or, most importantly, underpaying on them.
Nobody wants the taxman chasing them for money that hasn’t been accounted for and saved away.
There are some simple things you can do that will help you keep on top of it, what’s more, you don’t need to have a high street business account to do it.
These days there are alternative options to traditional high street banking and business banking is no different.
Through our association with Advanced Payment Solutions, icount Money can offer a low cost alternative to the high street with no monthly fees.
In this short guide I’ll explain how to keep a track of those important expenses and how you can do it using a CashPlus business account.
Accounting software such as Quickbooks helps to really simplify tracking and managing expenses.
Choose the same program your accountant is using, or one that is compatible.
This will make it easier for you or your accountant to import information to your tax return at tax time.
You can also find spreadsheets on Microsoft office that are specifically designed for tracking expenses.
Prepare for tax time
Ensure you accurately record expenses you plan to deduct on your business taxes, such as office equipment, business use of vehicles, travel and entertainment and charitable donations.
Don’t mix business with personal funds
Steer well clear of using personal funds or credit cards for business purchases.
Even if you reimburse yourself or your employees for these expenditures, it just adds unnecessary complications that can expose your business to taxman scrutiny.
Limit the use of petty cash
Petty cash purchases can start to cause issues if you don’t track it properly.
Limit the use of petty cash to times where it is absolutely necessary and create a cash account in your financial software so you’re tracking all cash expenditures.
Receipts are vital to document tax-deductible expenses in case you are ever audited by the taxman.
Make a note of the purpose of the purchase on each receipt.
Save on storage space by using a scanner on your smartphone to create PDFs or photos of receipts and file them digitally – well it is 2017 after all.
Keep up to date
Record expenses as and when they occur so you don’t end up with piles of receipts to work through at a later date.
Regularly documenting data will save you a ton of time on the long run whilst eliminating the risk of missing something.
Make use of technology
There are several mobile apps and cloud based systems that enable you to track your expenses on the go and categorize them to the appropriate project or client.
Try using something that will integrate with your existing accounting software.
Closely monitor results
Create weekly and monthly reports using accounting software to properly track and monitor expenses and revenues.
Examine your spending and develop a monthly, quarterly and annual budget based on those past expenditures.
Monitor your business expenses regularly to ensure your spending is falling in line with your budget.
Tighten your belt
If your business expenses are escalating above your allocated budget, or you need to improve your profit margins, look at each of your expenses and work out where you can cut back.
Start with the expenses that don’t contribute to your bottom line directly and cut back where you can.
Choose a prepaid account for your business expenses
If you’re looking for an account that is quick and simple to set up that doesn’t require a credit check then a prepaid account could be perfect for you.
The business account we offer through our association with APS comes with no monthly fee attached, no charges for depositing cash or receiving bank transfers and comes complete with three free outbound bank transfers per month.
You will receive your decision online instantly after completing the quick and simple application form.
The account would be in your business name, meaning you’re able to invoice your clients in your business name as you would with traditional high street banking.
- No account set up fee (you simply pay the first annual fee of £69)
- No monthly fee
- No charge for depositing cash at 14,00 locations nationwide – includes the Post Office®
- No charge for setting up Direct Debits
- No charge for inbound Bank Transfers
- 3 free outbound Bank Transfers per month – £0.99 per transfer thereafter
- No charge to use the MasterCard® Debit Card that comes with the account for purchases in the UK
- Free Online Banking – Manage Direct Debits, make Bank Transfers and more
- UK Call Centre with top quality customer service
Challenger banks are great alternative to traditional high street banking, for personal use and business.
If you want the ease of applying online and receiving an instant decision, the business account from CashPlus could be perfect for you.