Keeping Track of Your Business Finances: It Shouldn’t Be a Complex Equation

Sharing is caring!

Reading Time: 3 minutes

The financial aspect of running a business can seem overly complex. There's a number of different things that we need to be aware of and if we are running a business where it's just ourselves we can slowly become distracted by certain tasks that can potentially take us away from the important duties that we need to keep on top of regularly. Business finances are one excellent example. Ensuring you're keeping track of your financial matters doesn't need to be complex. Here are a few methods to implement.

Utilize the Right Resources

Our resources can be invaluable for guiding us in the right direction. There are many little components of your business finances that can run the risk of complicating matters. If you are wondering what is a profit and loss statement and what are tax-deductible expenses and many other questions, having the right resources allows you easy access to important information that will not overcomplicate things. It doesn't need to be difficult to follow, which is why ensuring you find the right resources, such as Chaser HQ, which can demystify the entire process.

Make Information Easy to Access

One of the most important parts of keeping your business organized in every single way is to have a filing system that works for you. There are so many things that we need to have easy access to such as our receipts and our expenses and while there's an abundance of accounting software that can help, you can also use spreadsheets if this is better for you. Lots of people find it easier to keep track of their expenses as they go by inputting them manually. 

Small business owners benefit from this approach because they're able to see where they are at any one time. It's a very simple and effective way of keeping on top of your business expenses and recognizing if you are operating at a profit or a loss. You also need to keep a hold of your expenses and having quick access to camera software that can take photos of receipts and then digitally file them away will make easy work of this so you can actually focus on doing the job you're meant to do.

Have a Routine for Reviewing Your Finances

If you opt for a solid piece of business accounting software, you need to regularly check your financial condition. But how often should you do this? Accounting experts confirm that every month should be adequate to gain an accurate understanding of a business's financial performance. 

Whether it's the profit and loss statement, cash flow statement, balance sheet, or accounts payable and receivable, every statement will provide an insight into the profitability and financial leverage of the business so you can make informed decisions and plan your tax appropriately. 

When you have an accurate snapshot of your business's finances, this allows for easier tax returns and gives you peace of mind because you are able to understand where you are on a regular basis. Many people don't check their statements as part of a stringent due diligence process; however, when you know exactly what direction you are heading in financially speaking, you'll always be able to react more swiftly to any potential financial pitfalls.

Not Falling Foul of Certain Mistakes

Tracking business expenses should be a simple and effective process; however, there are a number of common mistakes that you should avoid as a matter of best practice:

• Misclassifying expenses as this can lead to inaccurate financial records and potential tax issues.
• Not keeping physical and digital receipts can make it challenging to track accurate expenses and also claim tax deductions.
• Not separating business and personal expenses which can create confusion during the tax filing process. One of the best approaches here is to set up a business account.
• Neglecting to track small expenses because these little things can add up over time and when you don't keep an eye on these, it can lead to financial errors and missed tax deductions, meaning you are paying a lot more than necessary.
• Procrastinating the tracking of expenses which can lead to difficulties in maintaining accurate financial records.

The work involved in tracking finances can be complicated if you let it, but it's so important to have a system in place so you can focus on the business and so you can take on more clients, work with more customers, or generally operate more effectively. Keeping track of your business finances should not be akin to complex equations.

This is a collaborative post

Sharing is caring!