Use Small Business Accounting Software For Easy Expense Tracking

Small business accounting software usually has fewer features than bigger accounting packages

, but it does those few things very well and lets the user access them intuitively. Expense tracking is always going to be on the short list of must-have features for business accounting no matter what size the enterprise is. Some web-based accounting tools offer some convenient automation, but that's secondary to your ability to understand and maximize your ability to monitor your small business' expenses with the tool.

Businesses need to keep track of their expenses in detail for at least two specific reasons. The first is that many business expenses are tax deductable. But you can only claim and qualify for those deductions, thereby reducing your tax burden, if you have clear records of the amount and purpose of the expense, as well as some proof. The official law is that an expense must be both "ordinary and necessary" as is "commonly accepted" in the business' industry to be deductable. That's a question to ask after you know you'll be able to identify expenses when it's time to prepare for tax filings. And this requires a minimum level of expense tracking.

The other obvious reason to use small business accounting software for expense tracking is to acquire financial information. There are a number of reasons why you need to know how much money is coming into a business and going out of it. If you have good financial data on your expenses, you can make business decisions to do basic things like cut down on waste or reapportion funds to better-support an important component of the business. Even if you run your own business with no other employees, it can be helpful to realize that your biggest monthly expense is purchasing random last-minute shipping items. Neither this low level analysis nor anything more complex is possible without expense tracking. That includes essential activities like income projections and budgeting.

These might not seem like essential activities for a very small business when most of your attention gets exhausted just completing your primary service or product creation. But being a business is about more than just the product or service sold. Long-term viability and survival rely on being able to actually run the business and make business decisions based on a longer perspective.

Even if those decisions only include simple things like how much of a supply product to buy at one time or taking advantage of a small partnership opportunity, it's much easier to make them correctly with information about the business, information that you cannot have unless you collect expense data. Small business accounting software makes all this possible without too much work. But that can only happen once you realize that expense tracking is important and budget the time to start and maintain the habit.

by: John V

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