One of the major issues that many small businesses face in the course of their daily operations is that they do not always know exactly how much money is going out and coming in. Many owners, particularly those that allow their employees to occasionally make purchases on a company’s behalf, may have some difficulties in knowing exactly how much they’re spending, and for this reason it’s vital to make sure to keep better tabs on these issues.
The simple fact is that keeping good track of expenses is not only vital for the financial success of a small business, but it’s also relatively simple, according to a report from Allstate. For instance, one of the biggest things small business owners in particular may need to do when trying to figure out their company expenses is try to separate out their personal and professional expenses. This seems like a simple enough idea, but it can get a little complicated, simply because owners often use their own credit cards to make purchases for their companies. Therefore, making sure to keep close tabs on these issues will be vital to knowing exactly how much is being spent on operating the business.
When keeping track of these types of things, it’s important that owners know what they will be able to deduct from their tax liabilities, the report said. Obviously things like payroll, equipment costs, and office supplies are deductible, but that might not be the case for all meals or travel costs, and knowing how to separate out the one from the other in this regard is going to be vital to ensuring no problems with tax forms once filing season rolls around.
Of course, when it comes time to deal with these issues during tax season, owners will need to be able to prove what is and is not a business expense, the report said. For that reason, keeping all the necessary receipts, canceled checks, bills and the like is vital to ensuring that companies can prove everything they’re claiming, and keep the IRS appeased.
One cost that is often necessary for owners is small business insurance, but it doesn’t need to be a large expense. For instance, taking the time to track down more affordable workers’ compensation or general liability insurance policies could help independent enterprises help their bottom lines considerably.