7 Budgeting Tips for Expense Tracking

Office spaces can often cost up to $12,000 per employee annually and are one of the largest expenses for many businesses.

Depending on what your business does, office space may be essential. You likely have several other expenses, however, that aren’t. One of the best ways to budget for your business is through expense tracking, and it can help your company save a lot of money in the long run.

For 7 key tips on expense tracking for budgeting, keep reading.

1. Know Your Income and Expenses

This is one of the first things you need to do. Get a good idea of how much your business is bringing in and how much it’s spending, ideally by looking at the last few months.

Depending on how you generate income, it may vary, so take this into account. Seasonal work can bring in a lot of money across a few months, but not the whole year, for example. You also need to keep in mind that some income may not be predictable.

You also want to look at your expenses similarly. This should include all money going out, be it for bills, goods, other services, etc. A business expense tracker can help you get a more accurate idea of your overall expenses. It’s generally a good idea to slightly underestimate your income and overestimate your expenses. 

2. It’s Worth Tracking Expenses

In a lot of cases, tracking income is easier than tracking expenses. Within a business, there will likely be specific ways that income is made, but there can be a huge range of expenses. This is why many people fail to track expenses properly, which makes budgeting more difficult.

Bennett Financials provides a range of services that can help with expense tracking. With our bookkeeping services, it will be much easier to keep an eye on how your business is spending money, allowing you to make better-informed decisions.

If you track expenses properly (along with income) you’ll be able to generate an effective budgeting plan for your business.

3. Leave Room for Surprises

With time, you’ll be able to develop a strong budgeting plan, but it will never be perfect. This is because there can always be surprise expenses at any time. You need to be prepared for these so that they don’t create any major problems.

A typical example could be a plumbing issue at your business. If it’s something that has been going on for a while without anyone noticing, it may require a big repair job. You always want to have emergency funds ready to pay for something like this so that you can resolve it immediately and keep downtime to a minimum.

4. The Little Bits Add Up

This is something that everyone experiences in their personal lives, and it can just as easily apply to businesses. There are plenty of expenses that, when looked at alone, are almost completely ignored. A few dollars here or there may not seem like much, but when you start to build up more and more small expenses, it can make quite a big impact.

This is why it’s crucial to use an expense tracker to keep tabs on what you’re spending. You can then analyze how all the different things you’re spending on money add up, and see how much of a difference it makes. By doing this, you may find it easier to determine what expenses you’re paying for that you don’t really need.

5. Think Big Picture for Big Expenses

It’s likely that you already keep track of big expenses more efficiently than you are smaller ones, but what many people forget about are other expenses that are tied to larger ones.

If you need vehicles for your business, for example, you’ll always look at the cost to purchase or lease them and take this into account. But along with this comes things like insurance, fuel, maintenance, and more. These additional expenses can add quite a lot to the overall cost, so they’re not something you should ignore.

On the other side of this, some large expenses also act as investments. An example of this might be specialized training programs for your staff. While these will have a cost to them, they may allow your staff to then generate more money for your company in the future.

6. Track and Adjust

Even if you happen to be using the best expense-tracking app available, tracking is only a part of what you need to do. Once you have accurate details on your expenses, you can begin to adjust.

You might need to increase how much you’re spending on a particular item or service, and to do so you might need to take the money from elsewhere. If you know exactly what you’re spending, and what you’re getting, you can determine areas where you can cut back. This will allow you to put that money to better use.

7. Take a Positive Approach

At the end of the day, money, expenses, and budgets are all about numbers. With that being said, emotions can have a significant effect on how everything works out. This is something that’s usually more noticeable in people’s personal lives, but it can apply to businesses too.

When looking at income and expenses, you might not be happy with everything you see. This can cloud your judgment, and affect your decision-making. As such, you might end up making bad choices because you’re in a bad mood.

Always try to maintain a positive approach and keep a clear head. Doing so will ensure your decisions are based on logic rather than emotion, which will help you develop the most effective budgeting plan you can.

Help With Expense Tracking

Expense tracking is one of the most effective ways of creating a solid budget for your business. You can try to track your expenses yourself, but that can be incredibly difficult and time-consuming, especially if you don’t have much experience in doing so.

At Bennett Financials, we offer a range of services that can help with your expense tracking so that you can start saving money for your business. To find out more about our services, click here for a free consultation today.