Q: What is the best way to keep track of the little expenses that add up over the year?
A: A purple envelope. We’re a little biased around here and believe that a Mazuma Purple Envelope is the best way to track expenses. However, any color of envelope will do.
There’s essentially 2 parts of tracking expenses.
- Keep your receipts. You’ll want them as reference points in case your small business bookkeeping method or spreadsheet tracking fall behind. Plus, you’ll need to keep them in case you’re audited by the IRS.
- Getting the info from those receipts into a spreadsheet of some form so we can see how much you spent and where. Then we start figuring out where to take deductions and how much.
Even if you don’t use an envelope system, we’d recommend keeping up on tracking expenses and keeping your receipts. Checking in at least once a month on your financial health is key for any business. It’s easier to correct overspending or save so you have enough to cover your expenses or taxes rathe than be surprised later.
If a spreadsheet isn’t your style, go old school. Use a mileage book to keep track of trips or errands for your business. Envelopes or a simple expandable file folder for receipts are great to hold and/or categorize receipts by type or month.
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