We all know how we should be managing expenses, but sometimes our good intentions are forgotten in the busyness of, well, business. It’s easy to put a receipt aside and say, “I’ll deal with this later,” or do your own taxes so you don’t have to pay someone to do them. But the little shortcuts you take now could wind up costing you more in the end.
Doing your own taxes can result in costly errors. Or putting that receipt aside could mean you lose it or forget about it, and then you can’t take advantage of a business deduction. Here are five things not to do when managing expenses.
Top 5 mistakes business owners make when managing their professional expenses.
#1 Combine Personal and Business Expenses
No matter how big or small your company is, you shouldn’t combine your personal and professional finances. Combining them makes your finances a lot messier and difficult to track.
#2 Do Everything Yourself
You’re an expert at your business, but that doesn’t mean you’re also an expert in accounting or bookkeeping. Leave that to the professionals. It saves you headaches and professionals are more likely to see areas where you can save money or deduct expenses.
#3 Throw Away Receipts
Sure, you get tired of both looking at and filing those little pieces of paper, but come tax time, those receipts are deductions-gold. Hang onto them, as they also help you determine where your money is going and if you’re spending properly.
#4 Ignore Cash Expenses
Cash expenses don’t link to FreshBooks or other bookkeeping apps, so they’re easier to ignore or forget about. But they still count as expenses, so it’s important to keep track of them.
#5 Forget Outstanding Invoices
Don’t lose track of who you owe money to—or who owes you money. Cash flow can be difficult to predict in business, so stay on top of who pays you and when. Also, be sure to pay your invoices on time.