You have to look at the balance of your business checking account twice. It doesn’t seem right, but each transaction is familiar so there isn’t any fraud. How did you spend that much money?
Every business needs to know the answer to that question, from the biggest mega corporation to the kid mowing lawns in your neighborhood. Even if you have plenty of money in the bank, knowing what you spend each month is important for making almost any business decision.
Will you have enough money for next months’ expenses? How much will you owe in taxes? Can you afford that new piece of equipment? If you want to answer any of these questions, you need to have an accurate picture of your expenses.
Clients often ask me what method is the best for tracking expenses. The answer is, whatever method you will actually use. For some people, that’s writing the purpose of the expense on the receipt and putting it in a file folder. For others, it’s a phone app or computer program. And some businesses need a complex system of approvals and invoice matching.
It’s important to track every expense, from the new company truck to the book of stamps. Comparatively, the cost of a book of stamps seems like nothing to the cost of a truck, but small expenses add up. I bet you buy stamps a lot more often than you buy a new truck.
CMK Financial Services can help you with any questions related to expense tracking.