MileIQ: Mileage Tracker & Log

MileIQ Inc.

GET — On the App Store

View
MileIQPricing
Open MenuClose Menu
Small Business Tips

How to Track Business Expenses for Small Business

Marin Perez
April 22, 2019

Download MileIQ to start tracking your drives

Automatic, accurate mileage reports.

Get Started

One of the largest issues small business owners face is keeping track of business expenses. Without this, you risk not knowing how your business is doing, as well as some tax implications. Here's what you should know about small business expense management and tracking.

Why should I track every small business expense?

It's vital to keep track of every single business expense. This could be through an app or a spreadsheet. It could even be a box full of receipts you hand to your tax pro.

Let's go over three key reasons why it's important to keep track of your business costs on a continual basis.

Financial health

Is your business doing well? You might bring in a lot in revenue but what are you profiting at the end of the day? It's impossible to have a complete picture of your financial health without keeping track of business expenses. Without tracking these costs, it's impossible to have an accurate balance sheet.

Business expense tax deductions

By keeping track of business expenses, you can take the largest tax deduction you're entitled to. The more deductions you can take, the lower your taxable income will be, which means you'll have more money in your pocket.

The IRS isn't just going to take your word for it, though. You'll need proper documentation for all your deductions. If you ever face a dreaded audit and don't have proper records, the IRS can deny your deduction and impose penalties and fines.

Don't let that happen. Your business expenses are a source of an extremely valuable tax deduction every year. You can deduct business expenses as long as they're:

  • Ordinary and necessary
  • Directly related to your business
  • For a reasonable amount

The IRS can be particular about business expenses because some have tried to abuse this. You'd be surprised at what can fall into these categories, though.

You may be keeping track of your major expenses but it's important to track all of them so you can get the largest deduction possible. Some often-overlooked business expenses are:

  • Vehicle-related expenses: Along with the valuable mileage deduction, your tolls and parking fees for business reasons can also be written off.
  • Startup costs: It takes a lot of costs to get a business off the ground. Whether it's permits, market research or rent before your business opens.
  • Entertainment and meals: Remember, you can deduct some of your meals and entertainment costs when it comes to business but the IRS limits the size of these deductions.

Download MileIQ to start tracking your drives

Automatic, accurate mileage reports.

Get Started

Business expense reimbursements

If your small business has employees‚ especially those who work in the field‚ you may have to provide expense reimbursements. Whether it's a salesperson or somebody who picks up supplies, there will inevitably be times when they need to use their own money for something business-related.

The best businesses have a process for business expense reimbursements that ensures the expenses are accurate and reimbursements get made in a timely manner. It's pretty clear why it's important for these to be accurate but the timeliness is also important.

It's good to have these handled swiftly in order to have a clear picture of your books. Another positive is that timely reimbursements can boost employee morale. Finally, if your reimbursements are handled through what's known as an "accountable plan," you can also take a deduction on that amount as a business expense.

How automating expense tracking and management makes your life easier

Keeping track of business expenses can be a pain but it's worth it. Many successful small business owners lean on technology to handle this. Otherwise, you may wind up with even more paperwork or even not know what you spent due to misplaced receipts.

There are three main benefits of automating your expense management:

  • Accuracy
  • Security
  • Efficiency

Unless you're near-perfect, it's tough to make sure you're tracking every single expense. It really helps if your solution can track and log these expenses in real time. You'll also want to make sure these can be stored in the cloud, so you never have to worry about losing receipts or invoices again. Finally, most of us aren't amazing at this‚ learning on a tool allows you to focus your time and energy on doing something you're good at.

What to look for with expense tracking

There are a lot of expense tracking and management tools out there and I'd suggest finding something that fits the following criteria:

  • Easy To Use
  • Works How You Work
  • Easy Reporting

Make sure you pick something that you're actually going to use. That means the interface must be simple to pick up and master. It must be available on all the devices you'd want to use. Finally, make sure you can store your information securely in the cloud with easy access to it.

Reporting is going to be critical and integration with your accounting software is nice, but look for flexibility first and foremost. An expense tool that provides reports in easy-to-use formats will enable you, your employees and your bookkeepers to be working on the same page even if everybody uses slightly different software.

Still tracking miles by hand?

Use MileIQ to automatically keep a full, IRS friendly mileage log.

Get Started

Related Blog Posts

Small Business Tips

The Best Business Management Books for Small Business

Click through for our top picks for business management books that will help you better run your small business.

Small Business Tips

Approve Drives with a Click

Tackling tedious mileage tasks rarely feels like a good use of time. And few mileage tasks take more precious minutes than approving drives for reimbursement — checking drive routes, calculating mileage in a spreadsheet, signing off on reimbursement amounts

Taxes

Why is Tax Day On April 18 This Year (2017)?

Tax day is on April 18 this year because Emancipation Day is celebrated in Washington, D.C. on April 15. See why it's been extended this year.

Creative young people and small dog in happy workplace
Small Business Tips

Designing an employee benefits plan for your business

Research the best practices for designing an employee benefits plan for your employees. Learn about which benefits improve employee morale

Taxes

What is an Electronic Logging Device (ELD)?

An electronic logging device (ELD) is critical for many businesses to stay in compliance with federal regulations. Here's what you should know about an ELD.

Small Business Tips

How Black Friday can help self employed

Black Friday for the self-employed means you can pick up discounted computers and cars for work and still get tax savings.

MileIQ: Mileage Tracker & Log

MileIQ Inc.

GET — On the App Store

View
MileIQPricing
Open MenuClose Menu

One of the largest issues small business owners face is keeping track of business expenses. Without this, you risk not knowing how your business is doing, as well as some tax implications. Here's what you should know about small business expense management and tracking.

Why should I track every small business expense?

It's vital to keep track of every single business expense. This could be through an app or a spreadsheet. It could even be a box full of receipts you hand to your tax pro.

Let's go over three key reasons why it's important to keep track of your business costs on a continual basis.

Financial health

Is your business doing well? You might bring in a lot in revenue but what are you profiting at the end of the day? It's impossible to have a complete picture of your financial health without keeping track of business expenses. Without tracking these costs, it's impossible to have an accurate balance sheet.

Business expense tax deductions

By keeping track of business expenses, you can take the largest tax deduction you're entitled to. The more deductions you can take, the lower your taxable income will be, which means you'll have more money in your pocket.

The IRS isn't just going to take your word for it, though. You'll need proper documentation for all your deductions. If you ever face a dreaded audit and don't have proper records, the IRS can deny your deduction and impose penalties and fines.

Don't let that happen. Your business expenses are a source of an extremely valuable tax deduction every year. You can deduct business expenses as long as they're:

  • Ordinary and necessary
  • Directly related to your business
  • For a reasonable amount

The IRS can be particular about business expenses because some have tried to abuse this. You'd be surprised at what can fall into these categories, though.

You may be keeping track of your major expenses but it's important to track all of them so you can get the largest deduction possible. Some often-overlooked business expenses are:

  • Vehicle-related expenses: Along with the valuable mileage deduction, your tolls and parking fees for business reasons can also be written off.
  • Startup costs: It takes a lot of costs to get a business off the ground. Whether it's permits, market research or rent before your business opens.
  • Entertainment and meals: Remember, you can deduct some of your meals and entertainment costs when it comes to business but the IRS limits the size of these deductions.

Business expense reimbursements

If your small business has employees‚ especially those who work in the field‚ you may have to provide expense reimbursements. Whether it's a salesperson or somebody who picks up supplies, there will inevitably be times when they need to use their own money for something business-related.

The best businesses have a process for business expense reimbursements that ensures the expenses are accurate and reimbursements get made in a timely manner. It's pretty clear why it's important for these to be accurate but the timeliness is also important.

It's good to have these handled swiftly in order to have a clear picture of your books. Another positive is that timely reimbursements can boost employee morale. Finally, if your reimbursements are handled through what's known as an "accountable plan," you can also take a deduction on that amount as a business expense.

How automating expense tracking and management makes your life easier

Keeping track of business expenses can be a pain but it's worth it. Many successful small business owners lean on technology to handle this. Otherwise, you may wind up with even more paperwork or even not know what you spent due to misplaced receipts.

There are three main benefits of automating your expense management:

  • Accuracy
  • Security
  • Efficiency

Unless you're near-perfect, it's tough to make sure you're tracking every single expense. It really helps if your solution can track and log these expenses in real time. You'll also want to make sure these can be stored in the cloud, so you never have to worry about losing receipts or invoices again. Finally, most of us aren't amazing at this‚ learning on a tool allows you to focus your time and energy on doing something you're good at.

What to look for with expense tracking

There are a lot of expense tracking and management tools out there and I'd suggest finding something that fits the following criteria:

  • Easy To Use
  • Works How You Work
  • Easy Reporting

Make sure you pick something that you're actually going to use. That means the interface must be simple to pick up and master. It must be available on all the devices you'd want to use. Finally, make sure you can store your information securely in the cloud with easy access to it.

Reporting is going to be critical and integration with your accounting software is nice, but look for flexibility first and foremost. An expense tool that provides reports in easy-to-use formats will enable you, your employees and your bookkeepers to be working on the same page even if everybody uses slightly different software.

Get started for free