6 payment trends to look out for in 2023
For many small businesses, it pays to take managing business expenses seriously.
Besides the obvious benefit of preventing debt, recording and organising business expenses can help you boost profitability, expand your operations, and thrive amid an increasingly competitive market. Having your finger on the pulse when it comes to your overhead costs can also make things easier come tax time, as many expenses can be claimed as write offs and you’re less likely to miss potential deductions that could get you more money back.
To help you get across your business expenses, we’ve searched high and low to compile seven tips that you can use to keep them in order.
Tips for managing business expenses
1. Separate personal and business expenses
First things first, you need to ensure your personal and business expenses don’t cross over; mixing the two is a recipe for disaster and can lead to all sorts of problems such as unexplained losses, tax issues, chaotic accounting records, and difficulty gauging the true profitability of your trade.
So there’s never any confusion when it comes to whether an expense is for you or your business, make sure you clearly define each one and stick with this when you record your costs. (If you’re still not sure what sets the two apart, you can always seek advice from an accountant or tax attorney to spell it out for you.)
It’s also a good idea to set up a separate business credit card, cheque account, and savings account, to more easily keep the two worlds apart.
2. Pay yourself a salary
As soon as your business takes off, you should start paying yourself a salary. That way, you won’t be as enticed to dip into your business profits for personal reasons. Chat to your accountant about the right salary to get started on.
3. Pay bills on time, every time
Many organisations you deal with as part of your business, including suppliers, utility companies, and letting agents, will charge interest or apply penalties on bills that are paid late. These additional dollars can quickly add up to large sums, that make running your business more expensive than it needs to be.
To avoid spending more than you have to, get in the habit of organising your bills and paying them before they’re due. If organisation isn’t your strong suit, setting reminders can ensure you don’t miss any deadlines down the track.
4. Stay on top of your spending
Another important part of managing business expenses is staying on top of your overhead costs. A simple way to do this is figuring out how much you bring in each month and creating a budget based on your revenue, so you aren’t spending more than you’re making.
5. Invest in accounting software
A step up from spreadsheets, accounting software is a tool designed to automate business expenses as well as make them mobile so you can access them on the go.
With this software, you can do more than record pluses and minuses; depending on the one you invest in, you can send invoices, pay bills, manage payroll, and prepare your business activity statements. All of these can make managing your business expenses easier.
6. Use the right reporting tools
Reporting tools can be the make or break between effectively managing your business expenses; as you need accurate figures to create accurate records.
The Cost Analysis report displays your terms of trade, which comprise the fees charged to you per transaction for the various card schemes you accept. You can also bring up a tax invoice for a particular month, which shows exactly what you have been charged for EFTPOS machine rental and merchant service fees (including GST).
7. Hire an accountant or bookkeeper
It’s important to remember that you don’t have to handle your business expenses alone. Whether numbers aren’t your thing, or you simply don’t have the time to keep your records up to date, you can always seek out help from an accountant or bookkeeper.
They’ll be able to keep track of your funds and business expenses, for you. Knowing your business’ numbers, they’ll also be able to offer advice on how to improve your financial situation and make you aware of any issues and opportunities surrounding your business.
Recording and organising your business expenses is essential to keeping things running smoothly all year round, but especially come tax time. Adopting these strategies is a great way to get your business expenses in order (and to help keep them that way).