If you’re running your new business with little or no attention to expenses tracking, you’re flying blind.
The future of your business’s sustainability is anchored on your attitude to financial tracking.
It takes patience following rigorous steps to stabilize the future of your business.
You don’t need to be an expert in accounting and bookkeeping before you sustain your new business. You only need the information to succeed in your business finance.
In this post, I will show you how you can track your business finance in the first year.
What is Financial Tracking in Business?
Financial Tracking, also known as Expense Tracking, is a process of keeping records of your income and expenditure on a regular basis.
This is possible by monitoring every financial event associated with your business in a documentary form, ideally on a daily basis.
Financial activities monitoring happens by recording receipts, invoices, and business expenses into some form of the accounting ledger.
It gives you the information on whether you’re making a profit or a loss. And it works along with budgeting, which serves as a guide for your spending.
Why You Should Track Your Business Finance
Common value among business owners is to secure a prospective future for their investments. Meanwhile, your confidence in the future of your new business is tied to the benefits you stand to enjoy as you track your business finance.
Tracking your business finance;
Makes you a better money manager
The only instrument that can give you the confidence to stay on top of your budget, as a business owner, is through Financial Tracking. This could be on a daily, monthly, quarterly, or yearly basis, depending on your business needs.
Prepares you for tax season
Tracking your business finance will always set you on alert to be ready for your tax expenses. It reduces the time taken to prepare for this and secures your prime hours which could be invested in another aspect of the business growth.
Also, you have an idea ahead about what’s deductible for tax. You only need to approach your accountant to get a detailed list of tax-deductible business expenses.
Makes you reimburse your employees for any extra spending
This is one of the ways to build trust and commitment in the minds of your employees. They will develop the spirit of fair treatment in the course of their duties. This is one of the keys to move your business forward.
Eases your business forecasting
Flying blind in a business is disastrous to the future of that business. If your business finance is well tracked, you’ve paved the way for future stability. This is because it enables you to envision the complete picture of your business in the nearest future. As such, your business is secured with an awesome landing.
Financial tracking can make you determine the profitability of your business. This will assist you to offer your investors a better idea of your business revenue.
Opens your eyes to identify growth opportunities
If you track your financial activities, it will not only reveal the future prospects but also tap your consciousness against the potential threats that can mar your financial engagement.
Devising mechanisms to control the future obstacles, you identify growth opportunities which, if you leverage, your business will grow at a steady pace.
How to track your business finance (step-by-step Guide)
Tracking your business expenses is as important as other plannings like; business and strategic planning all of which are tailored towards the security of your business in the future.
Either you aim at getting the true picture of where your money is going or preparing for tax season, tracking your finances in and outflow is very crucial. Here are a few step-by-step to get it done:
1. Open A Bank Account
It’s wise of you as a business owner to keep your business income and expenses separate from personal and domestic finance. If you don’t have a sense of the disparity between the two, your business treasury is in the line. Plus, your personal financial engagement would be threatened all the time.
2. Select Cash or Accrual Accounting
Choose the appropriate account for your business from the cash and accrual accounting system just because it’s simple. The important thing is to opt for the most appropriate one to the level of your business.
Using cash accounting, you record transactions as they occur. You get to record your income when you receive money on sales and your expense when you payout.
However, accrual accounting has a more in-depth modality. You record your income as the product is sold, not until the payment is made to your account. The same thing happens to the expenses, take your record when you have the bill not when you pay.
Accrual accounting is part and parcel of the businesses with employees, large-scale businesses, and growing ventures.
3. Use A Cloud-Compliant Software
A cloud-based accounting tool is available to make your financial tracking activities very interesting. With this program, you can track your business finance anywhere at any time.
Also, it enables you to manage your business account, make it receivable and payable as the case may be.
Though, you have a choice to select from tons of this software that are available, ensure you choose the best for your business. You can, as well, use spreadsheet software like Microsoft Excel to keep track of your business finance.
4. Connect your Account with Financial institutions
This process makes it very easy to track all the expenses incurred by your business. Some businesses may be skeptical about this though, the truth is that it’s very safe, with in-built programs to protect your data.
Connecting your bank will avail you the opportunity to download all banking transactions automatically to your accounting software, and in some cases, have them automatically posted to the appropriate account.
5. Manage your receipt properly
Use the mobile app that is compliant with your accounting software program. In case the software doesn’t support it, choose to use an expense management application that will comply with your software.
With this, you can easily take a picture of your receipt and upload it on your software, store it for onward attachment to the appropriate expense.
6. Be Swift in Your Record Taking
You have learned in accounting 101 that your tracking records must take care of all the income and expenses. If you choose to connect your financial institutions to your software account, the process becomes daily automated.
Though, you need to set up your account properly to enjoy adequate allocation of the uploaded transactions.
Some applications accept manual data entry and some are automatic. You choose the suitable one for your business.
Whatever system you embrace, take a record of all your expenses promptly. Completing your bank reconciliations on a monthly basis helps to ensure that all transactions have been properly accounted for.
No doubt that your almost motive in your new business is formed around future stability. However, you can’t achieve this without proper knowledge of the financial flow of your investment.
If you track your business finances, you will envision the future of your new business from the first year of the setup. With this, you get control of every operation attached to money.
Now, follow the steps in this post and stay on top of the financial movement in your new business.
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