subject: Using A Credit Card To Track Business Expenses [print this page] While many business owners are aware of the convenient purchasing power of a credit card, some do not realize how easy it is to track expenses with a card. When using credit cards for business purposes, business owners can easily keep track of their expenses without having to worry about keeping track of anything on their own.
Tracking Business Expenses
When running a business, it is vitally important to be able to keep track of all expenses. Many of the expenses that businesses incur are tax-deductible. When it comes to filing a tax return for the business at the end of the year, the business needs to be able to come up with an accurate total for all of its costs. It can then include these items as deductions on its tax return for the year. This reduces the amount of taxable income and the amount of taxes that the company has to pay.
After filing a tax return, there is a chance that the business could be audited by the Internal Revenue Service. When the audit occurs, the IRS will request proof of all of the expenses that the company claimed on a tax return. If the business cannot provide proof of these expenses, the deductions may be disallowed and the taxable income of the business may raise. This will add to the total amount of money that the company has to pay in taxes for the year.
Using a Card to Track Expenses
When it comes to tracking business expenses, business owners have a couple of different options. One popular option is to simply keep receipts from every transaction that they incur. This definitely will work, but it can be a little bit difficult to do. Over the course of an entire year, a business could incur thousands of different expenses. Trying to keep up with all of these receipts can be very difficult. Considering that the company may want to hang onto receipts for several years, this can take up a lot of space.
Another way to track business expenses is to use a credit card. With this method, all of the business purchases are made with the card. Then the card issuer provides the business with statements of transactions. Typically, the card issuer will provide a statement every month. The cardholder usually also has the option of logging into an online account and making his own statement. This makes it possible to create a custom statement with all of the transactions for an entire year. This way, if the business owner needs to go back and prove a certain extent, he can simply pull up his card statement to show the IRS.
Multiple Cards
Another way that a business owner can track his expenses is to use multiple cards. Some business owners have multiple cards to use for different areas of business expenses. For example, one card can be used to pay for supplies while another one can be used for any business travel expenses. By breaking down these items into categories and having a card for each category, it makes it easier to track individual categories of expenses. This way, if the business owner wants to be able to see how much money is being spent in each category, it's easy to get this information.
