Tracking your business receipts and transactions can be daunting and tedious. From time tracking to ensuring the safety of your information, having the right tools can help understanding your bottom line easier, managing these transactions more efficient, and help scaling up much easier. As a small business owner, freelancer, entrepreneur, or solo-preneur these time consuming tasks can also be confusing and take you away from other priorities. There are many types of accounting software that can help manage these tasks and that are suited for small business needs. To best manage these transactions and receipts we have compiled the following guide.
3 Best Tips on How to Keep Track of Your Bottom Line:
1. Use an Accounting Software Designed for Small Business
Your business runs on cash flow, tracking your bottom line, key metrics, and a business scorecard. All these vitals are important to keep track of for business performance and making business decisions. Utilizing the right accounting software is the first step in that process. There are a huge variety of accounting softwares available, especially emerging accounting software for small businesses. The top options most companies explore are:
Depending on your small business and its needs each of the aforementioned options may offer its own benefits. Your industry, budget, and needs will dictate that best option for you. We have broken down some of these accounting software’s features below based off our research and rating entities:
|All Major A/R and A/P Transaction Forms||No||Yes||Yes||No||Yes||Yes|
|Estimates Quarterly Taxes||No||Yes||No||No||No||No|
|Integrates with CRM||Yes||No||No||No||Yes||Yes|
While each platform has its benefits, overall we recommend QuickBooks Online or QuickBooks Desktop for small businesses. The accounting software is ideal for small business because of its price point, depth, and its ability to be accessed remotely in the cloud.
2. Stay on Top of Expense Tracking
It can be difficult to stay on top of every single transaction as a business owner, especially when there are other high priority items and fires to put out. Having an accounting software that can easily help you enter, track, and manage these expenses will save you time and monitor your bottom line. In fact, as stated by the Income Tax Act and QuickBooks, “[a]s a business owner, you are required to keep these documents for a period of six years after the end of the tax year to which they apply.”
Several types of accounting software have mobile capabilities and apps, including QuickBooks and Freshbooks. For those that don’t, you will need another app to stay organized. These apps must offer receipt retention. Some possible apps include:
Depending on your needs, each of these apps also have different functionalities. Ensure that the app you choose integrates with your accounting software. For small businesses that must choose from one of the above apps, we recommend Expensify. It can integrate with Quickbooks and Expensify and will even give you the full capability to run a report per receipt and retain the copies of the receipts. Expensify will allow you to scale and give access and permissions to different managers, bookkeepers and more.
Overall, our recommendation is to stay with Quickbooks and use the Quickbooks App. On the Quickbooks app you can can even add a picture of your expense right on your phone. This app will integrate with your Quickbooks online platform so you have all your tracking done in one place.
If you do not have an accounting software or are onboarding one now, you may be manually tracking your expenses. To understand how to properly track expenses, manual or otherwise, the following are some best practices:
- Business expenses cannot be estimated or have approximations
- Documentary evidence (receipt photos) should show the amount, date, place and character of the expense
- Providing a written statement of the business purpose of the expense substantiates the nature or character of the expense
Some accounting software and apps will automatically format your expenses but for an example we have a sample of what it should look like:
|Expense Type||Amount||Date||Vendor||Description||Business Purpose/ Relationship|
|Maintenance||$323.86||02/20/2017||Swish Maintenance||Cleaning contractor to Detroit Office||Refinish of lobby floor|
3. File the Cleanest Books
Once you’re up and running on an accounting software and have your expenses tracked, the next best tool to manage your bottom line is to file proper taxes. Knowing what you can expense, write off, and having it well tracked will allow you to recoup the most amount of money when you file with the IRS at year end. The best way to ensure you maximize your refund is to be able to provide a document/proof that your business expense is incurred legitimately and its not lavish or extravagant. Proper filing is done by understanding your industry and having a qualified bookkeeper and accountant look over your books.
Taking the Next Step
Having the right accounting software, tracking your expenses, and filing taxes properly will help manage your bottom line. However, making meaningful goals and implementing changes to help grow based on these softwares and expenses can be challenging. Only experienced accountants and bookkeepers will be able to interpret and make recommendations based off of your cash flow. 365 BOOKSPRO can help you save time and money by managing your accounting software, tracking your expenses, and helping you file your taxes. Explore how we can help your bottom line today!