How do small businesses keep track of accounting?
Good accounting practices are essential for small business owners. Keeping track of finances is integral to running a successful business, and having the right accounting system can simplify this process. A lot of companies keep track of their expenses with expense tracking apps, but quickly find that the Bento platform makes it that much easier.
Let’s explore why enterprises of all sizes need to keep track of accounting and the necessary information you need to track expenses for your small business effectively. Bento offers real time expense tracking to help your accountant organize your finances and maximize your tax deductions. You can start a 60 day free trial today!
What is Accounting for Small Businesses?
Accounting involves recording, summarizing, analyzing, and communicating financial information. It provides a clear snapshot of an organization’s financial health and performance over time.
After registering your business, the next step is opening a business account to direct your income. Although it’s not mandatory for sole proprietors, it’s an excellent move for your business.
Separating your personal and business finances makes it easier to operate the business and evaluate profitability. It also allows you to prepare for tax season.
Common business accounts among small business owners include:
Petty cash (for the physical cash at hand)
Accounts receivable (for the money owed to the business or company)
Accounts payable (for the money the business or company owes)
You can start with a checking account and then open a savings account as the profits come in. These accounts will assist with organizing the cash flow funds and planning for tax season.
For example, you can open a savings account to set aside a percentage of every payment as self-employed tax withholding. Generally, it’s best to set aside 25% of your income or more if your income is higher.
Accounting will serve as a tool to help businesses make informed decisions by providing visibility into how money comes in and out of your business. Start a 60 day free trial with Bento today.
Why is It Important to Account for Business Expenses?
As a small business owner, accounting is fundamental as it enables you to:
Track their finances more effectively
Identify opportunities for cost savings or investments
Measure performance against goals
Provide accurate reporting to investors or lenders
Additionally, with proper accounting practices in place, you can ensure that you comply with all legal requirements, such as filing taxes correctly and efficiently monitoring cash flow. By taking control of your finances through sound accounting principles, you can safeguard your future success while avoiding costly mistakes down the line.
Other outstanding benefits of tracking your accounting include the following:
1. Expense Management
Expense management is an essential component of running a successful business. It involves tracking, monitoring, and controlling all costs your business incurs to maximize profits.
It’s essential to pay attention to types of receipts such as:
2. Entertainment and Meals
These receipts often come from business meetings in restaurants or cafés to accommodate various clients. Each receipt should indicate the purpose of the conference and the attendants.
3. Out-of-town Travel
The CRA and IRS are keen on business owners who claim personal activities under business expenses. Maintaining updated receipts in the system helps you track business-related activities while away. You can easily upload receipts and record expenses right into our spend control dashboard.
4. Transport-related Expenses
It’s essential to record why, when, and where you use company vehicles or other transport means for business. It will help you allocate the percentage of use for transport-related expenses.
5. Gift Receipts
You may receive gifts such as concert tickets, but it makes a difference if you attend the event with the person who gave you the gift. In such a case, the expenses you incur will fall under the entertainment instead of the gift category.
The receipts should note such details to help you differentiate expenses.
Proper expense management requires visibility into where you’re spending your money. It can help identify areas for potential cost savings or investments.
Expense management also includes:
Setting up alerts
Taking advantage of software such as apps or online platforms to track expenses efficiently
Additionally, businesses need to understand the legal requirements associated with their specific industry. It’s the only way to ensure you comply with applicable laws when filing taxes and managing finances.
By adequately managing expenses, you can gain better control over your financial situation, which can lead to greater success in the long run.
You can Make Smarter Business Decisions Through Financial Awareness.
Making critical expense decisions for your business, like investment-related decisions and closing deals, requires you to be fully aware of your financial health and condition.
Tracking your business’s income and expenses is a sure way to remain clear about the financial statements. Besides present awareness, it’s also an excellent way to predict your business’s future financial health.
These insights will empower you to make intelligent business decisions that will prevent future pitfalls while ensuring future success.
These vital business decisions can make or break your blooming business. Therefore, you must ensure precise calculations based on your business needs.
Preparation for the Tax Season
Tax season can be challenging for your business if you’re ill-prepared. Getting overwhelmed with data last minute can trigger expensive mistakes. At a time when brand reputation is a crucial business pillar, such errors can be detrimental to your business and finances.
You can simplify these tasks by keeping track of your business income and expenses. Furthermore, it’s an excellent way to identify ways of saving money on your taxes and getting refunds for some of your costs.
Understanding Your Business Profitability
Most business owners experience financial ups and downs. The best way to ensure more ups is to determine what works for your profits and what doesn’t. You can only get these insights from tracking your income and expenses.
Tracking your accounting helps you identify areas where you can reduce expenses and where to generate more income. Your business needs robust expense management to boost its profit margins. Are you ready to start your free trial?
How Do Small Businesses Keep Track of Their Accounting?
Small businesses need to track their accounting to get a clear picture of their financial health and performance over time.
Some small businesses use methods such as:
Manual bookkeeping is still highly popular due to its low cost, but it is labor intensive
Outsourcing services such as tax preparation
Hiring an accountant on retainer who can provide advice on best practices for keeping track of finances
However, most small businesses use software, apps, or online tools as a cost-effective way to keep track of their accounting. Expense report apps can easily generate reports and analyze data so that owners can see where they stand financially.
Additionally, several modern accounting software offers features such as:
These features are all essential for running a successful small business. Furthermore, having access to real-time information allows owners to make informed decisions about their finances when needed quickly. By using these methods, small business owners can ensure accurate tracking of expenses while also saving time and money.
Let’s take a closer look at the most effective ways to keep track of your accounting.
Business Expense Tracker Apps
Expense tracker business apps are an invaluable tool for small businesses. They provide a convenient and cost-effective way to track expenses, invoices, receipts, and other financial information in real-time while on the go.
Expense trackers record your business expenses, highlighting the areas where most of our money goes to. These insights can help you minimize, if not eliminate, overspending and maintain healthy cash flow.
Most free business expense tracking apps also allow you to set up budgets and alerts so that you can remain aware of your spending habits at all times.
Bento Pay takes it a step further, allowing digital invoice settlement for vendors and other people outside your business. This confidential and secure digital payment process requires no sensitive card or bank information from either side.
With Bento, you can easily monitor your spending without manually entering data into spreadsheets or bookkeeping software.
Online Expense Trackers
An online expense tracker for small businesses makes it possible to capture receipts quickly and categorize them into various categories, such as:
This categorization ensures easy tracking. A good number of online expense trackers are usually free versions. Although with most free business expense tracker, you can get a lot of features, there limit certain valuable functions that you can only get from paid versions.
Bento is convenient and cost-effective compared to manual bookkeeping or spreadsheets.
For instance, you can use Bento Tags to tag transactions, keeping related expenses in one place. Since the tags are flexible, you can create labels for any purpose, such as particular projects. You can also add notes for each transaction, such as the attendants of a business lunch.
Bento provides an efficient way of tracking expenses without manually entering data into multiple places; instead, all information is in one place, making it easy to access anytime when needed.
Expense Tracking Software
Expense tracking software provides an easy-to-use platform where businesses can quickly input, organize, and manage expenses in real time without requiring manual entry or spreadsheets.
Additionally, many of these online expense manager solutions come with features such as budgeting tools. They allow you to set up alerts and stay aware of their spending habits at all times.
Moreover, they make it easy to capture receipts quickly so that you can remember and notice the information when creating reports or filing taxes down the line.
Although adopting expense tracking software is a best practice for any business type, it’s a must-have for particular situations, such as:
Your Business Involves Frequent Travel
The truth is that anyone can lose receipts, regardless of how careful you are. If you frequently travel for business purposes, accounting software is the most effective way to keep track of your receipts.
Bento comes with innovative AI receipt capture. The AutoMatch feature helps you match pictures of your receipts with the correct transactions. If you have challenges reconciling and organizing digital receipts, you can forward them to us via firstname.lastname@example.org.
Our team will automatically help you match them to the proper transactions.
You Have Several Employees Who Require Tracking Expenses
Adopting accounting software is essential if several employees need to monitor their business expenses. Although a spreadsheet can be sufficient for a one-person operation, it may be inadequate and inefficient in tracking the costs of several people.
Bento features pre-approved controls and easy search and filtering tools. These tools eliminate the need to spend time and resources on paperwork. Your team can focus on productivity rather than chasing down expenses.
Your Business Is Experiencing Growth
If your business is small, but you’re currently growing or planning to expand, it’s best to invest in robust accounting software. This will allow you to track your business expenses properly from the early stages.
Bento empowers you with real-time visibility into your cash flow and transactions. It also helps you simplify bookkeeping by streamlining transactions to one platform.
Bento integrates with accounting software, which ensures seamless data exportation and syncing.
Your Business Operates Using Multiple Bank Accounts
Manual expense tracking from one financial institution can be hectic and time-consuming. Having more than one business account only magnifies these challenges.
You can avoid all this stress by leveraging expense-tracking software. Automatic importing reduces the chances of missing transactions, especially when you have separate business cards or bank accounts for different expenses.
Alternatively, you can customize corporate cards based on your business needs. Bento cards have all the benefits and functionalities of a standard corporate card but with more power and sustainability.
You can choose between two excellent card options for complete flexibility and control. You can customize and use these cards based on your particular needs.
For instance, you can use Spend Limit Bento cards for regular or daily business expenses and needs. Fixed Value Bento cards are suitable for specific purposes, such as a vendor or one-time payments.
We host all personal and card information on encrypted Google Pay and Apple Pay wallet systems. This prevents unauthorized access and security risks if you lose or misplace a card.
Additionally, mobile wallet apps enable two-factor authentication when logging in and processing every transaction for additional security.
How to Choose the Best Business Expense Tracker
When choosing the best expense tracker for small businesses, you must consider the needed features.
Easy tracking of expenses and income
Categorization of transactions and invoices
More advanced expense tracker business apps may also offer features such as:
Bank account reconciliation
It is essential to select a platform that allows for customization so that you can tailor it to your specific needs.
It would be best if you also considered the costs of the software when selecting one for your business. Some may require monthly subscription fees, while others are free or have tiered pricing structures based on usage levels.
Furthermore, cloud-based solutions require you to ensure your data remains secure. It’s essential to evaluate your provider’s security measures, like multi-factor authentication and encryption protocols. Out of all of the best business expense trackers out there, nobody compares to what bento offers.
Other essential aspects include the following:
Your expense tracker for small businesses should be compatible with your e-commerce platform to ensure seamless information transfer. It should also allow third-party app integrations that offer tools such as contract management.
Your accounting software should simplify and facilitate switching from single-entry bookkeeping to double. Most small business owners start with the single-entry method because it’s easy to use. Such systems record income the moment it comes in and expenses when they go out.
However, the double-entry method is more suitable for growing businesses. It allows you to leverage advanced financial reporting.
Bento integrates with accounting software, including:
Zoho Books and all Zoho expense tracking features
Intuit QuickBooks and QuickBooks Online
This makes it even easier to sync data between systems for accurate reporting.
Ease of use is one of the essential aspects to consider when selecting your business expense tracking platform. If several employees need to submit business expenses, the software should be easy for them to set up and use. You can submit expenses right through the app of software interface.
An easily-accessible and straightforward platform will save you numerous logistical nightmares down the road. For instance, if your team members travel abroad, you should ensure they can easily access the platform in their language. They should also be able to submit their expenses in the usual currency as the software handles the conversion.
Bento for business has a simple yet feature-rich dashboard. With spend management controls, you can prevent unintended or unauthorized spending so that you can save funds for essential purchases.
Bento for business allows you to:
Limit merchant categories to avoid unauthorized use.
Activate and deactivate cards anytime at the click of a button.
Restrict spending to workdays
Allow mobile and online purchasing when a card is not present
Switch international use on and off for security purposes
Create flexible spending amounts based on your business needs
Unlimited billable clients per month
Easily upload all your receipts
Furthermore, your business spending data automatically syncs with your accounting system to help you operate your business more efficiently and sync the proper tracking needed for your business.
User-friendliness also involves having an efficient and innovative mobile app. Effectively tracking business expenses requires you and your team to submit them as soon as possible.
The platform should have the technology to allow receipt image capture to make this easier and easily record expenses.
Your team can simply take pictures of business-related receipts using their smartphones and directly upload them to the mobile app.
With Bento’s Android and iOS apps, you’ll have access to all the features on the expense management platform. You can create cards, capture receipts, manage transactions, and visualize your spending on the go.
You’ll also get real-time alerts and notifications and receipt upload reminders for each transaction.
Analytics and Reporting (Awesome expense reports!!!)
Your expense tracking software should be capable of organizing your business expense data to help you determine where exactly your finances go. For instance, it should be easy to identify differences in your spending by week, month, or year.
Bento makes it easy to assign expenses to particular projects and implement budgets to avoid spending beyond your means. It also allows advanced reporting to help you track your financial health.
Bento offers efficient reporting tools that let you:
Automate expense reporting
Record receipts and expense reports in one place
Export data into accounting platforms such as QuickBooks for simpler report generation
Take Charge of your Accounting to Secure your Business’s Future
Everyone is always looking for the latest business expense tracker app. The truth is that no business expense tracker app can match the power of Bento for Business. Bento’s powerful platform blows all of the expense tracker apps out of the water.
Managing finances can be easy if you leverage modern technology solutions such as Bento for Business. With our platform, you can gain greater control over your financial situation.
It also provides you with valuable insights into your financial health and helps guide decision-making in the future. Self employed entrepreneurs? Small business owners? Large corporation? It doesn’t matter how big or small your company is, Bento has a solution that will fit your needs.
Our digital solutions allow businesses to track, organize and review data about expenses continually and efficiently. You can generate reports quickly and accurately when needed.
The Bento Dashboard provides you with real-time visibility of your savings. It enables you to reach long-term goals more efficiently without sacrificing accuracy or overlooking any crucial aspects of financial management.
Schedule a demo today or start your 60 day free trial and discover how to take your business to the next level.