How to track business expenses
There are lots of benefits to tracking your expenses, like knowing where your money is going and preparing for your tax return. Here’s a step by step guide to help you get started.
Manage expenses online
The best way to keep track of your business expenses is by using accounting software. All your information will be kept in one place, and you’ll have access to automated reports too.
There are different ways you can record your expense. You can either upload a receipt, connect your bank feed and import transactions, or enter the details manually. Whichever method you choose, we recommend attaching the receipt to your transaction for your record keeping.
Get a great routine
To keep track of your expenses accurately, you should make sure you’re doing your bookkeeping regularly. That means recording your transactions, uploading receipts and approving expenses daily or weekly.
Bokio smart bookkeeping templates make recording your expenses easy. Simply search for the type of transaction you want to record, for example office supplies, and we suggest the right bookkeeping template to use.
Smart bookkeeping templates means all the bookkeeping is taken care of for you. You don’t need to know the chart of accounts, double entry bookkeeping, or calculate VAT. All you need to do is give your transaction a title and press record.
Read our tips to help you get a great bookkeeping routine
Use the profit and loss report
Once you’ve recorded your expenses it’s time to track your expenses.
When you have automated reports keeping track of your expenses is simple. The profit and loss report will give you an overview of where your money is going, including your expenses. You can see a breakdown of your finances by account, so you can see which areas you’re spending money on.
If you want to dig deeper, you can see the different accounts your expenses have been included in, and look further to see the journal entries. This will help you identify if there are any areas where you can cut down on spending.
Take care of employee expenses
If you have employees then you’ll need to manage employee expenses too. Using an accounting software with integrated expenses means you can keep track of employee expenses online.
You’ll be able to see which expenses you need to approve and pay out, and your employees can log in and track their expense claims. Then, all the details can be recorded in your business accounting with just a few clicks.
Identify your most costly areas
One of the benefits of tracking your expenses is that you can see where your money is going. By using reports you can identify which areas are costing you the most, and if there are any expenses you need to cut back on.
Knowing your regular expenses will help you create a realistic budget for your business and develop a long term plan for success.
Know what you can claim as allowable expenses
You can claim expenses back on your Self Assessment tax return! These are called ‘allowable expenses’. Allowable expenses can be deduced from your profit, so you don’t pay tax on them when you submit your Self Assessment tax return.
There are certain types of expenses which are allowable. For example, you can’t count private purchases as allowable expenses. Here’s what you can claim on:
- Office costs
- Travel costs
- Clothing
- Staff costs
- Reselling goods
- Legal and financial costs
- Advertising, marketing and entertainment
You can only claim expenses that are directly related to your business. Read our guide for more information on what you can and can’t claim.
You can use your profit and loss report to help you fill in your allowable expenses on your Self Assessment tax return. Find out more about how to do that here.
When you track your expenses and do your accounting, you can estimate how much tax you will pay and can prepare by setting money aside.
Manage your expenses with Bokio
With Bokio’s accounting software, you can do your bookkeeping, invoicing, and manage your expenses all in the same place. We have everything you need to help you prepare for your Self Assessment tax return, submit your VAT Return for Making Tax Digital and keep the right financial records. If you need an extra hand, we can help you find an accountant to work with.
Accounting is kept simple with Bokio, so you have more time to spend running your business.
Note: This article was updated August 2023
