Tracking business expenses: why it is so important for a local business

Let's get something out of the way: you can’t 'half-track' your business expenses. No, either you track your expenses comprehensively or there’s no point in doing it. Expenses apps are a great way to help you do that.

Most small business owners are aware of the need to track their business expenses. They know that only what gets measured can be managed. But in the hustle and bustle of running a business without an extended staff for support, they don’t track business expenses to the degree they should. Expenses apps are the solution for that.

What is a business expense app?

As a small business owner, freelancer or solo contractor, you work with limited resources and are forced to do several routine and repetitive tasks. Automation tools like expenses apps make it easy to track all your business expenses in an easy-to-use format.

They will record all expenses that you or your team members would make. Expenses apps will then deliver accurate expense and pay reports of your business. The popular expenses apps will also let you easily scan your receipts and create downloadable reports which will make it easy to file taxes.

Benefits of using an expense tracking app for business

Expenses apps have become some of the most popular mobile-friendly apps for small businesses and freelancers because they deliver demonstrable and immediate advantages.

Financial awareness: It’s easy to lose track of all your business expenses while managing other things. An expense tracking app will automatically record everything, which will enable you to understand whether your expenses have overshot your monthly budget.

Prompt reimbursement: No employee wants to send a travel or dinner receipt and then wait weeks for the business to pay them. With the best expenses apps, you’ll be able to quickly verify the expense and reimburse the employee.

Tax preparation: If you don’t track your expenses or you keep postponing them, it will be extremely difficult when it’s time to file and pay your taxes. Expenses apps will do all those automatically for you and make it exceptionally easy to file taxes.

Shows profitability: Just because your business has a steady income doesn’t mean it’s profitable. To know that, you should know how much you spend every month, quarter and year. With popular expenses apps, you would know your expenses and be able to easily deduct them from your income to know whether or not your business is making profits.

Challenges local businesses face with expense tracking apps

Even with all their advantages, several small businesses run into these problems when using popular expenses apps:

Incorrect data entry: Employees may input the wrong amount or an accountant might choose the wrong category. These manual errors will force the app to give wrong results.

Loss of receipts: A common problem is when employees lose travel or dinner receipts. Although they can request a copy, the process might be tedious.

A long process of approval: Even after the employees submit their receipts, the app would require the owner or manager to approve them. If there’s a long delay, employees would feel frustrated.

Late submission: Since small businesses may not have enough people on their staff, employees might be too busy to submit their receipts on time.

How to decide on the best expense tracking app for your business

You should choose an app that can easily scan your receipts and deliver reports. It should also be easy to use for all the members of your team. There are additional features to keep in mind like GPS integration that lets you track the distance you drive.

Finally, although you should choose a paid version for its added features, if your business doesn’t need it, you can opt for a free version.

In short

With expenses apps, you’re not just tracking your spending. You’re also adding the power of automated financial management to your business.