Tips for tracking business expenses

Quick insights

• Tracking business expenses may help small business owners stay on track of their financial goals.
• Common business expenses include office leases, employee payroll, travel and more.
• Business credit cards often come with features intended to help business owners with expense management.

Tracking business expenses can help small business owners create realistic budgets and forecast for the future. It can also shed light on potentially wasteful spending habits that could get in the way of achieving financial goals.

Opening a dedicated business bank account can be a good first step in tracking expenses. However, there are many other things business owners can do to potentially further streamline the process even further.

Learn more about the benefits of expense tracking, best practices for small business expense tracking and how to manage expenses when self-employed.

The importance of tracking expenses

Accurate expense tracking typically allows for more accurate business bookkeeping. It can also be a helpful practice in separating business and personal finances. Using business funds for personal purchases can make it hard to determine your cash flow or how much credit you have available.

Additionally, expense tracking provides insights into spending patterns. Businesses can analyze categories in which they spend the most money and determine if there are any cost-saving opportunities available.

Tracking expenses on a monthly basis may make it easier to spot patterns. Finance stakeholders can use these types of insights to adjust budgets as needed.

Common business expenses

Business expenses include any costs associated with running a business, so they can vary depending on factors like industry and company size. For example, a freelance writer's expenses may differ from those of an accounting corporation.

A few common business expenses across industries include:

• Office rent
• Utilities
• Office supplies
• Mileage
• Travel
• Payroll
• Insurance
• Postage and shipping
• Bank fees
• Advertising

Best practices for tracking small business expenses

Every business is different, so the expense tracking process may vary. Below, we've compiled a few tips that may help you begin formulating an expense management process that works for your business.

Consider opening a business bank account

If you're a new business owner, you may not have a business bank account yet. Opening a bank account that you'll specifically use for work expenses can help you separate business and personal finances. This clearer picture of your business finances may assist you in creating budgets or better understanding your cash flow.

Record all expenses

Many companies choose to record their expenses via expense reports. These are itemized forms that detail business-related expenses made on behalf of a company. They typically include details like:

• A brief description of each expense
• The date each purchase
• The category of each expense
• Category subtotals
• Total of all purchases
• Any accompanying receipts

Ensuring that employees properly categorize expenses in these reports can help with budgeting. This is because categorization can make it easier to identify spending patterns.

Explore expense management software

If you're a freelancer or run a small business, you may not have many expenses. In this case, it may be manageable to manually record expenses. As your business grows, you may choose to invest in expense management software to save you some time.

This type of software is often able to automate tasks like expense categorization and expense report generation. It may also be able to sync with your business credit card for additional financial insights and streamlined expense reimbursement.

Consider a business credit card

Using a dedicated business credit card can help simplify the expense tracking process. This is because many business credit cards allow primary cardmembers to issue individual employee cards and set spending limits.

Business credit cards may also allow cardmembers to earn rewards on business-related purchases. If you're interested in applying for a card that offers opportunities to earn rewards as well as features that could assist in expense tracking, explore the Chase Ink suite of business credit cards.

Regularly review and analyze your expenses

By regularly reviewing monthly expenses, you can track spending trends, plan future budgets and make informed financial decisions overall.

This may also be a good time to reconcile your bank account. Bank reconciliation is the process of comparing your bank statement to your financial records (business expense reports, in this case) to ensure there are no discrepancies or errors.

Keeping track of expenses when you're self-employed

Keeping track of expenses is also important for individuals who are self-employed. The key difference is that you may not have other employees to help.

Because of this, it could be helpful to come up with an expense management system. This can be as simple as finding a free template for expense reports online and replicating that for your business. And even if you don't choose to invest in expense management software, it is a good idea to keep copies of receipts and invoices for recordkeeping and tax purposes.

Freelancers, sole proprietors, independent contractors and gig workers who are self-employed may also be eligible to apply for a business credit card. This can be a useful way to separate and track business expenses.

In summary

Regardless of your business' size, it can be helpful to track expenses. While smaller businesses may not need the features of expense management software, they may save you time as your businesses (and in turn, your expenses) grow.

Consider opening a business bank account to help keep work and personal expenses separate. And whether you're a solopreneur or work with a team of other employees, you may benefit from the features and rewards available from business credit cards.