Expense tracking can feel like a chore sometimes, right? Especially if you’ve got a pile of receipts waiting to be recorded in your books. But it doesn’t have to be. With the right tools and simple strategies, creative professionals like graphic designers, photographers, and creative agencies can streamline expense tracking. This gives you extra time to focus more on doing what you love.
Here are some practical tools and tips that make expense tracking effortless.
1. Use Software Designed for Creative Businesses
Expense Tracking done manually or using spreadsheets can lead to errors and wasted time. Instead, invest in software tailored to small businesses and freelancers.
- Recommended Tools:
- FreshBooks: Especially suited for project-based businesses, offering expense tracking and invoicing in one place.
- Xero: Allows you to upload receipts directly, linking them to the appropriate accounts. This automation reduces time and errors, making it easier to keep track of expenses.
- QuickBooks Online: Ideal for tracking expenses, categorizing transactions, and syncing with bank accounts.
- Wave: A free tool with robust features, perfect for solo entrepreneurs.
Pro Tip: Set up automated bank feeds in your software to save time and ensure no expenses are missed.
2. Separate Business and Personal Finances
Mixing personal and business expenses can complicate bookkeeping and cause tax headaches. Opening a dedicated business account and using a separate credit card ensures clean records and easier expense tracking.
- Why It Matters:
- Simplifies tax deductions.
- Helps you monitor cash flow.
Pro Tip: Choose a business credit card that offers perks like cashback on purchases. Look for specific perks tailored to your needs. I use CapitalOne for straight cash back rewards to my account.
Here are two more articles that cover this topic in depth: 13 Reasons Why Small Business Owners Should Avoid Co-Mingling Personal And Business Expenses and The Benefits of Keeping Personal and Business Finances Separate
3. Save Every Receipt
Receipts are crucial for documentation,. Digital storage solutions can make this process hassle-free.
Receipts are crucial for documentation, especially important if you’re audited. Thankfully, most accounting software like those above allow you to upload and store receipts directly within the platform. This eliminates the need for separate apps and keeps everything in one place.
- How It Works:
- Snap a photo of your receipt using the mobile app.
- Link it to the corresponding expense entry.
- Store everything securely in the cloud.
- Xero can automatically categorize your uploaded receipts to some extent.
Pro Tip: Make it a habit to upload receipts at the end of each day. Or set up a recurring appointment with yourself for a weekly “receipt review” of expense tracking. This helps keep the pile down and ensures all expenses are logged and organized.
But remember, if you switch accounting software, typically the uploaded documents won’t be included in the data migration process. If you feel you might be making a switch at some point in the future, there are stand-along apps that also allow you to ‘snap and save.”
- Expensify: Snap photos of receipts and let the app categorize them automatically.
- Shoeboxed: Ideal for creating digital backups of physical receipts.
- Hubdoc: Consolidates receipts, invoices, and bank statements in one place. XERO beautifully integrates with Hubdoc, which offers more sophisticated receipt scanning and categorization capabilities.
4. Categorize Expenses Correctly
Proper categorization helps you understand your spending habits and prepares you for tax season. Most expense-tracking software includes predefined categories, but you can customize them based on your business.
- Keep in Mind:
- If you have expenses that you use for both business and personal, figure out what percentage of the expense is for business. For example, evaluate a mobile phone or laptop. This is the amount you can deduct.
- Typically purchases with a useful life of more than a year and a purchase price of $2500 to $5000 or more can be depreciated (spread out over several years.) Think large purchases such as office furniture or the latest computer equipment. Your tax accountant will determine whether to depreciate or take it all in one year.
- Travel and Meals & Entertainment are common traps. Most accounting software includes these in their standard Chart of Accounts. What you need to remember is, Entertainment is no longer deductible at all. Meals are deductible at 50% only, even for travel.
- If you have a home office exclusively for business use and its your principle place of business, there are deductions available to you. Keep track of your Utilities, Maintenance & Repairs, Insurance, and Property Taxes. There are a couple of ways to deduct this expense. Your tax accountant will guide you in the best method for your situation.
Pro Tip: Consult the IRS guide to business expense resources for a full list of deductible expenses.
5. Stay on Top of Mileage Tracking
For photographers and designers who frequently travel for work, tracking mileage is a must. Many accounting platforms like FreshBooks, Xero and QuickBooks Online include mileage tracking features within their mobile apps.
- How It Works:
- Use the app to automatically log trips or manually enter mileage.
- Categorize trips as personal or business-related.
- Review and export mileage reports when needed.
Pro Tip: Regularly review your mileage logs to ensure accuracy and maximize deductions. Be aware, if you live in a remote area like I do, your mileage tracker may not connect to GPS. If not, use a spreadsheet template from your Microsoft or Apple platform. I snap a photo of my odometer before and after my trip. Then transfer it to the spreadsheet. This is more cumbersome, but the mileage deduction can be worth it if you drive a lot.
6. Review Expenses Regularly
Regular reviews of expense tracking ensure your finances stay organized and help you spot areas for potential savings.
- How Often?
- Weekly: Log receipts and categorize expenses.
- Monthly: Review reports to assess spending trends.
Pro Tip: Use insights from your expense-tracking tools in your accounting app to negotiate better deals with suppliers or adjust your pricing. You might also find this article on pricing your services helpful.
Make Expense Tracking Work for You
By adopting these tools and practices, you can simplify expense tracking and keep your projects running smoothly. Whether you’re just starting out or have an established business, taking control of your expenses will save you time and stress in the long run.
Ready to simplify your bookkeeping? Click the PINK button to schedule a chat and learn how we can help make your finances effortless!
