Whether you’re a freelancer, the owner of a small business, or part of a traditional corporation, managing expenses is one of the most important parts of running your business. The IRS requires that businesses track their expenses and keep receipts for any money spent on behalf of their company.
Track Expenses Where You Can
Use the Right Tax Form
- Use the right tax form.
- The form depends on your business structure (sole proprietorship, partnership, corporation).
- Check with your accountant to find out which form you should use.
Be Specific About Business Use of Personal Assets
If you use a personal asset for business purposes, it’s important to be specific about the use of that asset. Personal assets include cars, homes and property. If you want to deduct the cost of using these assets for your business (e.g., if you drive between two offices or take clients out to lunch), then it’s crucial that you keep track of all receipts related to those expenses.
For example: if your company provides employees with cell phones and pays the bill each month, but those employees also use those phones for personal calls or texts–and don’t reimburse their employer–then those costs cannot be deducted from taxes as business expenses because tax laws dictate that only certain types of payments made by employers qualify as deductible work-related travel expenses, such as airfare tickets bought through airlines or railroads; lodging at hotels; taxi fares between airports/train stations and hotel rooms; parking fees incurred while traveling on business trips; toll bridges/tunnels used while driving between cities during working hours (i.e., before 9 AM)
Save Receipts for Every Business Expense
When it comes to managing business expenses, one of the most important things you can do is save receipts for every expense. This will help ensure that you are able to deduct the correct amount on your tax return and keep track of all the money that has been spent on behalf of your company. It’s also important because some receipts have information such as credit card numbers or even signatures on them which must be protected from hackers and thieves who might try stealing them if they were left unprotected in an accounting software program like QuickBooks Online.
The easiest way to save receipts is by using a mobile app like Receipt Hog or Expensify (both available for both iOS and Android). These apps allow users take pictures of their receipts with their phone cameras so they can easily upload them into a cloud storage service like Dropbox or Google Drive later on when needed!
Once uploaded into these services there are several options available depending on how long until filing season begins:
- Manually enter each item onto an excel sheet for reference purposes throughout tax season – this would require about 2 hours per week but could save hundreds if not thousands depending upon how many transactions occurred throughout 2017-18 fiscal year ending June 30th 2018.* Use third party services such as Gusto which offer automated accounting solutions including payroll processing; invoicing clients/customers; generating 1099 forms when appropriate etc… All done automatically based upon predetermined criteria within settings menu options provided by Gusto itself.* There are several companies out there offering similar services but we recommend going with one offering free trials before committing yourself financially
Know What Counts as a Work-Related Travel Expense
If you’ve never managed your own business expenses before, the tax laws can be confusing. In general, travel expenses are deductible as long as they’re work-related and you have receipts to prove it.
Travel expenses include:
- Airfare, hotel and car rental (including mileage if you drive)
- Meals while traveling on business
- Entertainment costs during the trip (such as tickets to a ball game)
Learn how to manage your business expenses.
To get started, you’ll need to learn how to manage your business expenses. The first step is choosing an accounting software that works for you and your business. You can use something as simple as Excel or Google Sheets, but it’s best if the program comes with features like invoicing tools and automated backups of your data so that it doesn’t get lost in case something happens on your computer (like a crash).
Next up: track all those expenses! Whether it’s through an app or just by keeping a spreadsheet on Google Drive, make sure every receipt gets entered into a system so that they’re easier to find later on when tax season rolls around again next year. When filling out tax forms at year-end, keep in mind what counts as work-related travel costs versus personal errands like grocery shopping or gas money spent driving back home from work each day (we’ll talk more about this later). Finally–and this one might seem obvious–save all receipts!
With these tips, you’ll be able to manage your business expenses more effectively. You can also check out our other blog posts on how to track and organize expenses, as well as how to create an expense report using Excel.