LUTZ BUSINESS INSIGHTS
Expense Management for Startups
lauren harris, cas manager
If you’re in the beginning stages of starting a new business, you probably have dozens of items on your to-do list and it seems like they all have to be done right now. Since it’s likely that you’re already spending money, you need to have a good way to track your expenses.
Many new companies use the shoebox method – throw all of your receipts into a box and don’t think about them until it’s time to pay quarterly estimated taxes or prepare your annual tax return. This approach has numerous downsides such as:
- You will forget to keep and store some of them, which means you’ll miss out on some tax deductions.
- You won’t remember why you spent the money, so you won’t know how to claim specific expenses on your tax return or how to bill customers for purchases.
- It’s difficult to impossible to create expense reports, making it hard to know where you’re overspending.
- Finding one receipt in a box full of them takes a lot of time.
Organization is Key
At the very least, you need to develop a manual system for organizing your receipts as they come in. They should be filed in a way that makes sense to you. If you’re not ready to commit to an accounting application yet, use paper file folders. You could separate them by date or by type or even by client if a lot of your expenses are billed back to customers.
Depending on the type of tax return you are filing for your business (Schedule C on Form 1040, S Corporation 1120S, etc.), you may consider dividing them into categories that match the expense or deduction line items on the tax form you will file. If you want to record them to better accommodate reporting and tax preparation, you could also set up an Excel spreadsheet.
The Best Solution
Small business accounting software and websites solve a lot of the difficulties associated with manual expense tracking. QuickBooks Desktop and QuickBooks Online are the most popular and are simple to set up. In addition to providing an automated, organized way to record, store, and find your expenses, they help you manage your other business functions such as sales, products and/or services, customers and vendors, and payroll.
QuickBooks Online excels at expense tracking. To save time and improve accuracy, you’re able to link your online bank activity and import cleared transactions. You can add details to your expense entries – assigning categories, marking them as billable to specific customers, and even attaching copies of receipts (you can snap a photo of them with your smartphone using the QuickBooks Online mobile app).
We specialize in helping small businesses automate their finances using QuickBooks. We can also supplement all or some of your accounting work, leaving you more time to concentrate on getting your new company up and running. Contact us to have a conversation about your QuickBooks and accounting needs.
ABOUT THE AUTHOR
LAUREN HARRIS + CAS MANAGER
Lauren Harris is a CAS Manager at Lutz with over five years of related experience. She specializes in small business consulting including payroll tax reporting and compliance, software installation, training and support, and outsourced accounting assistance. In addition, she works with clients to improve their internal processes and procedures.
AREAS OF FOCUS
- Business Consulting
- Outsourced Accounting
- Payroll Compliance & Consulting
- QuickBooks Training & Support
- Accounting Software Consulting
- Franchise Accounting & Support
- Tax Compliance
- Restaurant Industry
- Construction Industry
AFFILIATIONS AND CREDENTIALS
- American Institute of Certified Public Accountants, Member
- Nebraska Society of Certified Public Accountants, Member
- Certified Public Accountant
- BSBA in Finance and Accounting, University of Nebraska, Omaha, NE
- Midwest YouCan Foundation, Treasurer
- Teammates Mentor
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