Keeping Track of Business Expenses for Small Businesses: A Complete Guide

Tracking business expenses. It feels like a mundane, boring task. However, for small business owners, tracking business expenses is something that can make or break their overall financial success. Think about it this way: it gives you (or your higher-ups) a clear roadmap of where every dollar is spent in your business. Not only does this help with managing cash flow, but it also highlights potential savings opportunities hiding in plain sight.

Yet, if you’re a small business owner, you likely know the challenge of juggling finances. From limited resources to a lack of expertise, keeping track of all your finances can be burdensome. If not addressed, it can lead to cash flow problems or missed deductions.

This is where accounting software and expense-tracking tools come in. With these solutions, you can automate data entry, categorize expenses, generate reports, and so much more. Essentially, these tools make financial management easy.

Below, you’ll see not only how to keep track of expenses for small businesses but also how expense-tracking tools can simplify your processes. But first, a quick review of business expenses.

What are business expenses?

Business expenses are, as the name sounds, the costs of running your business and includes various expenses. Rent for your office space, employee salaries, utilities, inventory purchases, and marketing costs are just a few examples. Smaller expenses—like office supplies or software subscriptions—also fall into this category.

Your business expenses are different from your personal expenses. Personal expenses are what you spend to manage your day-to-day life—groceries, personal entertainment, streaming subscriptions—these are all personal expenses. Business expenses are the costs directly tied to your company’s operations and essential for generating revenue.

Categorizing expenses is another critical step in learning how to manage business expenses. By organizing your expenses into categories (such as fixed, variable, or one-time costs), you gain a clear picture of where you’re spending your money. Not only does this help with budgeting, but it also helps you identify where you might be overspending. Plus, when tax season rolls around, having all your expenses neatly categorized and in a single business bank account or single accounting software platform makes it so much easier to compile your records.

How To Set Up an Effective Business Expense Tracking System

Setting up an effective business expenses tracker can help you maintain your financial health, ensure smooth operations, and determine where your most valuable opportunities are. To get started, you’ll want to take a straightforward approach that won’t overwhelm you or your team. Here’s how:

1. Create a Business Budget

Consider your budget as your financial blueprint. It’s what should outline your expected income and expenses for a specific period. Be sure to carefully estimate your monthly costs, including your rent, utilities, payroll, and marketing. With a clear budget, you can measure actual expenses against your projects, helping you spot any discrepancies and adjust as needed.

2. Choose a Good Accounting System or Tool

Next, find an accounting solution that fits your business needs. Whether you go with a simple spreadsheet or more sophisticated software, find something you feel comfortable using on a day-to-day basis to track and manage business expenses.

3. Establish Expense Categories

After you’ve set up your accounting system or business expense tracker, establish your expense categories. More simply, break down your costs into specific areas, like office supplies, utilities, travel, salaries, travel, marketing, etc. This organization helps you more easily see where your money is going so you can identify trends and areas for savings. Plus, it simplifies your bookkeeping process within your expense tracker, something that’s particularly beneficial during tax season.

4. Set Up a Dedicated Business Bank Account and Credit Card

Next, set up a dedicated business bank account and business credit card. Separating your finances not only streamlines your tracking expenses for small businesses but also protects your personal finances. Essentially, it ensures your business transactions are distinct, making it easier to track business expenses and simplifying your accounting process.

5. Implement a Routine for Recording Expenses

Finally, establish a routine for how to keep track of business expenses and income. Consider setting aside time each week or every month to input your expenses into your accounting system. Remember, consistency is key. Regularly updating your expense records (either on your own or with the help of accounting software or tracker apps) helps you stay on top of your finances and makes it easier to catch any discrepancies early on.

A Look Into Popular Expense Tracking Tools & Software

The right business expenses tracker will help you maximize your success, help you follow your budget, and simplify tracking business expenses. Below is a quick look at the top seven accounting platforms for small businesses, along with their key expense-tracking features. From Certify and Expensify to FreshBooks and Quickbooks, here’s a look into some of the best expense management apps to keep track of your income and expenses.

1. Certify: User-Friendly Accounting Software

Certify has a user-friendly, intuitive interface that helps you streamline your business expense reporting and management. The expense tracking app includes features like mobile receipt capture and automated expense categorization. The business expense tracker also easily connects with various accounting systems, making it easy to track business expenses from anywhere.

2. Expensify: Easy-to-Use Expense Tracker

Expensify is an easy-to-use expense tracker that features a few robust features, such as receipt scanning and expense report automation. The Expensify expense tracker also includes mileage tracking and customizable approval workflows, helping you to more efficiently manage expenses across your teams.

3. FreshBooks: Designed for Service-Based Small Businesses

FreshBooks is particularly useful if you’re a service-based small business, as the platform offers expense tracking alongside invoicing capabilities. Plus, FreshBooks’ user-friendly dashboard gives you a clear overview of your financial performance via in-depth expense reports and includes tools that help you track billable hours and expenses in a single place.

4. QuickBooks Accounting: A Popular Expense Tracking Platform

One of the most popular accounting platforms on the market, QuickBooks, includes extensive expense tracking features. With the platform, you can manage invoicing, payroll, and reporting all in one place, making it an easy choice if you’re looking for an all-in-one accounting system.

5. SAP Concur Expense: An Enterprise-Level Expense Management Platform

Though SAP Concur is designed for larger businesses, it does offer powerful expense management features that can be used in small business settings—especially in managing and tracking business expenses. Some of the features included in SAP’s accounting software include travel integration and reporting capabilities. Additionally, SAP Concur Expense is geared toward automating your entire expense management process. This makes it so much easier for you and your employees to submit expenses.

6. Shoeboxed: Simple Expense Tracking

Shoeboxed is another expense tracker app (with an incredibly easy-to-use interface) that simplifies expense tracking with its receipt scanning feature, which allows you to quickly digitize receipts and store them on the platform. You can also use mileage-tracking features or integration tools for more comprehensive financial management within the expense-tracking platform.

7. Zoho Expense: A Robust Expense Tracking Solution

Zoho Expense gives you a solid expense tracking solution with features like receipt scanning and expense approval workflows, and it easily integrates with other Zoho products. The affordability and comprehensive features of the expense tracker app make it a good choice if you’re looking to streamline your expense management and better manage your business expenses.

To help you choose the right small business expense tracker, carefully consider what aspects of financial management are most important to your business and narrow your choices down from there. For example, if you’re looking to better manage business receipts, Zoho Expense or Expensify is the perfect choice. If you’re looking for accounting software that helps with financial reporting of where your income and expenses are going, Quickbooks and Freshbooks are the perfect choice.

Remember, there are a lot of business expense trackers out there—don’t just go with the first expense tracker you see. Go with the expense tracking app that’s actually going to deliver results.

Podium: Elevating Your Small Business with Simple Expense Management

Keeping track of where every dollar spent in your small business is critical for keeping your financial health in good standing, improving expense management, and ensuring your business grows. By closely monitoring your spending with expense-tracking software, you’ll find areas where you can improve processes, streamline your budgeting, and make smarter, more strategic decisions that drive success and help you better manage expenses. Plus, a business expense tracker (whether it’s Expensify, Certify, or Quickbooks) can help you better manage expense tracking, expense reporting, and so much more.

With Podium’s AI Employee, you can take your expense management and your chosen accounting software to the next level. Rather than focusing on manual data entry, scanning every single business receipt or tracking expenses, Podium allows you to focus on more important tasks. With Podium’s solutions, you’ll have access to powerful, automated tools that not only streamline your processes and save you time but also optimize your financial processes.

Ready to see how it works? Watch a demo today!