Tag Archives: direct sales expenses

Tracking Business Expenses in Direct Sales

Not many people enjoy having to do the books. But, if set up properly, and with the right knowledge, they are not as cumbersome.

Expenses

Expenses in Direct Sales (Photo credit: Phillie Casablanca)

For anyone who runs a business, they know that one of the tasks that must be accomplished is the accounting. For some, this is a job which they hate as much as toilet cleaning, but it is one that has to be done. Even if you use an accountant do to the final year end papers, if you do a good job with the day to day books, their job will be easier. Here are some ideas to help with tracking the expenses so that it will not be as much of a hassle.

Tips

  • Have a separate bank account for your business expenses
  • Put as many of your expenses on credit cards as possible
  • Create a place where you put all your receipts for when you sit down to do the books
  • Depending on how much paper you have, put everything for each month in one envelope
  • Have a filing cabinet so that if you have a lot of paper you can organize things in categories

Know Your Expenses

If you categorize your expenses correctly, it will end up helping you in the long run when it comes to tax time. This list assumes that you are running a business outside of your home, as there are other deductions that you are entitled to with a home based business.

  • Advertising – business cards, web site marketing
  • Insurance – Business insurance – does not include health insurance premiums
  • Interest – Any interest you pay on accounts such as credit cards or loans
  • Legal and/or professional services – Accountant or lawyer fees that you pay
  • Office Expenses – Anything beyond supplies for your office
  • Rent or lease – Premises or equipment
  • Supplies – Paper, toner, notepads or anything else routine
  • Travel – Cost of travelling to conventions or meetings
  • Meals/Entertainment – Amount paid for meals or entertaining clients. This has a special tax ramification which is why it should be separate
  • Utilities – Gas, electricity, telephone, Internet
  • Dues – Subscriptions to magazines or trade groups your business is a member of
  • Other – Any items that you are not sure where they belong can be put here

Make sure you keep the receipts that go with all of these expenses, as you will need them to show your accountant and possibly the IRS. But if you can get your expenses itemized through the year, it will make it easier for your accountant and you will spend less money.

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How to Handle your Business Expenses

Accounting and paperwork are scary to a lot of business owners, but it is a part of life. By setting up a system, you will make your life a lot easier.

Receipt Please

Receipt Please (Photo credit: Peter π)

For most people, accounting is not a priority in their business, but when month end or tax time comes, they are scrambling to find all their documents and prepare things. But if you take a bit of time each week or month to track your expenses, you will be ahead of the game and you will not have to look all over the place to find your paperwork.

One Location – First things first, put all your receipts in one location. This way, even if you do not have time to deal with it right now, you will know where to find it.

Make Notes – Mark your receipt with any relevant notes such as you were mailing a parcel to Jane or you took Joan out for coffee to discuss why your business would be a great fit with hers. These receipts are easy to forget their purpose.

Legibility – Make sure that the receipt is legible. If it is not, you can ask the location to write you a written receipt. If it is on the glossy till paper, you may want to photocopy or scan it, as those tend to fade over time.

Keep Current – Try to work on your books every week or at a minimum, once a month if you do not have a lot of transactions. This will save you a lot of time and headaches down the road.

Filing – Have a filing system that makes sense and you can keep up with. Challenge yourself to see how fast you can find something; if you have to go through multiple folders then it is not the right system for you.

Credit Cards – A great way to keep track of your spending is to put everything onto a credit card or debit card where you get a statement listing the expense. You won’t forget about it this way. Do not use the same card for your business as you do for your personal spending, as this can be very confusing and cause issues at tax time, especially if you are audited.

Envelopes/Folders – Envelopes and folders are a great way to organize your paperwork. Put unrecorded receipts in one until you record it, and then move to the appropriate folder once it’s recorded. You may choose to organize these by month or by type of expense; whichever works better for you and makes more sense.

One of the best reasons for keeping your expenses current and tracked is that you can see at a glance how well your business is doing and where you may be spending too much money. This is very important for a small business owner.

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